Near-term support to GBP set to fade – Danske Bank

The Pound Sterling (GBP) has benefitted from a sharp repricing of the Bank of England. Economists at Danske Bank analyze EUR/GBP outlook.

Relative growth outlooks and broad central bank pricing to weigh on GBP

Over the past month, EUR/GBP has continued its move lower on the back of primarily a sharp BoE repricing. This could continue to lend support in the near term.

At present, we do not see the global investment environment to create meaningful divergence between EUR and GBP. However, we expect the UK economy to perform relatively worse than the Euro Area and expect relative growth outlooks and broad central bank pricing to weigh on GBP. 

We target the cross at 0.8800 in 6-12M.