EUR/GBP could reach parity in the case of a no-deal Brexit – Danske Bank

Analysts at Danske Bank see the EUR/GBP moving around 0.90 over a 12 month horizon but the warn it could reach parity in a no-deal Brexit scenario.  

Key Quotes:  

“The range of possible outcomes is likely to be 0.86 (if Brexit-related news improves markedly) to 0.91 (against expectation but if we see much weaker data and/or by pricing a higher probability of no-deal Brexit). We keep the forecast for the central scenario to be EUR/GBP at 0.90 over a full 12-month horizon.”

“Towards year-end, the risk appears slightly skewed towards GBP strength and peak volatility, in our view. In our base case where we get another extension, we expect EUR/GBP to continue trading in the current range. This is also the case for a snap election, when the prospect of a hung parliament is probably not much different from what we are witnessing currently.”

“We remain very negative on GBP in the case of a no-deal Brexit, when we still see EUR/GBP moving towards parity. In the even we get an orderly Brexit (one way or another), we expect EUR/GBP to move lower, probably down to the 0.83-0.86 range.”