19 Feb 2015
EUR/GBP head towards 0.7400 in the near term – Danske Bank
FXStreet (Edinburgh) - In the view of Morten Helt, Senior Analyst at Danske Bank, the bearish tone around the euro and the solid prospects of the UK economy will be the main drivers of a decline in the cross.
Key Quotes
“EUR weakness coupled with a decent UK outlook will keep EUR/GBP under pressure for now”.
“However, downside potential might be counterbalanced by political risks stemming from the unusually high uncertainty about the UK general election on 7 May and we expect EUR/GBP to trade around 0.74 in the coming months”.
“Fundamentally, the UK economy is expected to continue to recover at a solid pace and we still look for the first hike to arrive in August”.
“If we are correct, the BoE is priced much too dovishly (first hike set for Q1 16) and we see more upside potential in UK rates and look for a lower EUR/GBP in the coming 3 to 6 months as markets call for a re-pricing of MPC policy in a more hawkish direction”.
“On a 6 to 12 month’s horizon, we expect EUR/GBP to stabilise and eventually move higher as the eurozone recovers.
Key Quotes
“EUR weakness coupled with a decent UK outlook will keep EUR/GBP under pressure for now”.
“However, downside potential might be counterbalanced by political risks stemming from the unusually high uncertainty about the UK general election on 7 May and we expect EUR/GBP to trade around 0.74 in the coming months”.
“Fundamentally, the UK economy is expected to continue to recover at a solid pace and we still look for the first hike to arrive in August”.
“If we are correct, the BoE is priced much too dovishly (first hike set for Q1 16) and we see more upside potential in UK rates and look for a lower EUR/GBP in the coming 3 to 6 months as markets call for a re-pricing of MPC policy in a more hawkish direction”.
“On a 6 to 12 month’s horizon, we expect EUR/GBP to stabilise and eventually move higher as the eurozone recovers.