EUR/GBP back to 0.71 in 6-month – Danske Bank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 22, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    FXStreet (Edinburgh) - Analysts at Danske Bank see the European cross slipping to the 0.7100 area in the medium-term.

    Key Quotes

    “GBP has started the new year on a very weak note due to a combination of negative risk markets, waning BoE rate hike expectations and some Brexit risk premium probably being priced in at this early stage”.

    “In the short term, we expect GBP to remain under pressure in a negative risk environment and we have revised EUR/GBP forecast higher. We now target the cross at 0.75 (0.74) in 1M”.

    GBP is significantly oversold, according to our short-term financial models, and we still look for a rebound in the coming three-six months driven by a repricing of the BoE, as the UK economy is expected to continue to grow above trend in 2016”.

    “We target 0.73 in 3M and 0.71 in 6M. In H2 16, the Brexit theme should gather further pace and weigh increasingly on GBP, while the euro, to a greater extent, should benefit from fundamentals and we now target EUR/GBP at 0.75 in 12M”.
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