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GBP remains under pressure – Danske Bank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 11, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Edinburgh) - Jens Pedersen, Senior Analyst at Danske Bank, has noted the British pound will remain under pressure in the next months.

    Key Quotes

    “GBP has started the new year on a very weak note due to a combination of negative risk markets, an increase in short-term correlations with risk assets caused by substantial USD buying, 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 our EUR/GBP forecast higher”.

    “We now target the cross at 0.74 (0.71) in 1M. The 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 re-pricing of the BoE, as the UK economy is expected to continue to grow above trend in 2016”.

    “We target 0.73 (0.70) in 3M and 0.71 (0.70) in 6M. In H2 16, the Brexit theme should gather further pace and weigh increasingly on the GBP, while the EUR, to a greater extent, should benefit from fundamentals and we now target EUR/GBP at 0.75 in 12M (revised up from 0.73)”.
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