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16 Jun 2015
EUR/GBP points southwards in the medium term – Danske Bank
FXStreet (Edinburgh) - Morten Helt, Senior Analyst at Danske Bank, expects the cross to grind lower towards the 0.69/0.70 band in the medium term.
Key Quotes
“In the short term, the outlook for EUR/GBP lies in the hands of the European sovereign bond market, where further selloffs will continue to underpin the cross”.
“However, we expect the Bank of England to hike interest rates in November. This is not priced in the market, and we still expect EUR/GBP to trade lower in the coming 6M driven by relative rates from a repricing of Bank of England”.
“We now target the cross at 0.72 in 1M (previous 0.73) and 0.70 in 6M (0.69). As such, we still expect EUR/GBP to bottom in H2 but the risks are that the cross temporarily undershoots our 3M and 6M estimates”.
“On a six-to-12-month horizon, we expect EUR/GBP to stabilise ad eventually move higher as the Eurozone recovers and as Eurozone inflation is set to pick up significantly. This should cause EUR downside to fade and we target the cross at 0.71 in 12 months”.
Key Quotes
“In the short term, the outlook for EUR/GBP lies in the hands of the European sovereign bond market, where further selloffs will continue to underpin the cross”.
“However, we expect the Bank of England to hike interest rates in November. This is not priced in the market, and we still expect EUR/GBP to trade lower in the coming 6M driven by relative rates from a repricing of Bank of England”.
“We now target the cross at 0.72 in 1M (previous 0.73) and 0.70 in 6M (0.69). As such, we still expect EUR/GBP to bottom in H2 but the risks are that the cross temporarily undershoots our 3M and 6M estimates”.
“On a six-to-12-month horizon, we expect EUR/GBP to stabilise ad eventually move higher as the Eurozone recovers and as Eurozone inflation is set to pick up significantly. This should cause EUR downside to fade and we target the cross at 0.71 in 12 months”.