EUR/GBP bullish, could reach 0.90 – Danske Bank

Senior Analyst at Danske Bank Morten Helt remains bullish on the European cross, targeting the 0.90 area in the medium term.

Key Quotes

“EUR/GBP was pushed higher yesterday as the Bank of England kept the door open for more easing later this year if data meets expectations on the August projections”.

“However, the BoE signals that the probability has declined, as near-term indicators have been better than expected. We expect the BoE to cut by 15bp from 0.25% to 0.10% in November, but it is a close call and will be data-dependent”.

“Market is currently pricing in a 6bp rate cut at the November meeting and 11bp in total in a year’s time”.

“We expect EUR/GBP to trade higher in coming months due to the economic imbalances in the UK economy and not least the substantial current account deficit relying on foreign funding amid Brexit uncertainties”.

“Moreover, BoE easing and political uncertainty is also expected to weigh on GBP. As a result, we still like our long EUR/GBP position in the FX Trading Portfolio targeting 0.90”.