EUR/GBP expected to reach 0.90 in 6-moth – Danske Bank

In view of analysts at Danske Bank, the European cross is expected to advance to the 0.90 area in the medium term.

Key Quotes

“We are adjusting our EUR/GBP forecasts in line with what we communicated before and immediately after Brexit. We now forecast EUR/GBP at 0.86 in 1M, 0.88 in 3M, 0.90 in 6M and 0.88 in 12M”.

“Near-term, we expect prolonged political uncertainty will weigh on the UK economy and interest rate policy. The UK runs a current account (CA) deficit around 5% of GDP. Given uncertainty about near-term FDI and portfolio flows into the UK, the CA will have to adjust, which should imply a sharp fall in domestic demand and a weaker GBP to support exports”.

“Longer-term, we expect the GBP will stabilise to some extent given attractive valuations”.