EUR/GBP is looking for a new direction as the UK is looking for a new PM. What’s next?
Here is their view, courtesy of eFXdata:
Danske Research discusses GBP outlook in light of revising its EUR/GBP forecasts profiles around 0.90 over the coming months.
“In coming months, (1) we are neutral to somewhat positive on politics but worry that (2) global appetite for credit-like risk will continue worsening, (3) noticing that UK macro is now surprising on the downside and (4) that ECB passiveness is leading to broad EUR strength. In our view, factors 2-4 are likely to weigh on EUR/GBP,” Danske argues.
“We believe the risk of a no-deal Brexit will be downplayed as a driver for the GBP in the period ahead. Rather, slightly weaker UK data, global sentiment, and the ECB are new headwinds for EUR/GBP. A large repricing is probably limited, as relative fundamentals are still good, even if they become slightly less so.
In turn, we revise our expectation for the GBP to a weaker path and forecast EUR/GBP at 0.90 in a range of 0.86-0.91,” Danske adds.
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