According to analysts from Danske Bank, the EUR/GBP is likely to move range bound for now, but then to the downside.
Key Quotes:
“As we predicted, the rally in GBP in the wake of the highly anticipated BoE rate hike proved short-lived and EUR/GBP has bounced back above 0.89 again.”
“The risk premium on GBP is likely to remain elevated in the near term as Brexit negotiations move into an important period during the Autumn, and we look for EUR/GBP to remain range bound (most likely within 0.875-0.895) near term with Brexit uncertainty expected to remain the key source of volatility.”
“Longer term, we still expect EUR/GBP eventually to trade lower driven by Brexit clarifications and fundamental valuations. We target EUR/GBP at 0.8650 in 3M, 0.84 in 6M and 0.83 in 12M.”
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