EUR/GBP has moved higher in the past few weeks. What is the outlook for the currency?
Here is their view, courtesy of eFXdata:
Danske Research maintains a bullish EUR/GBP bias in the medium-term
EUR/GBP has moved higher since mid February driven by a combination of a repricing of ‘no deal Brexit’ risks, repricing of Bank of England (BoE) amid virus fears and the weaker USD. The next big trigger for a leg higher in EUR/GBP will be the continued Brexit process, once this starts to hit the wires again when we get closer to trade negotiations in June.
We expect EUR/GBP to hit 0.89 in 3-6M on Brexit fears and BoE easing. Our base case remains a deal will be reached eventually, which should trigger a move lower back towards 0.84, probably some time in the autumn. We target 0.84 in 12M,” Danske notes.
“A key near-term risk to our forecast is whether the BoE is going to ease monetary policy as much as currently priced, which could send EUR/GBP lower for a while,” Danske adds.
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