EUR/GBP Eyes 0.74 in 6-Month – Danske Bank
Morten Helt, Senior Analyst at Danske Bank, believes the cross could
head towards the 0.74 handle in the medium term and following a ‘Remain’
win in the UK referendum.
Key Quotes
“Longer term, the outlook for EUR/GBP very much depends on the outcome of the EU referendum”.
“In
our main scenario, we assume a status quo for the UK, meaning that
people vote to remain in the EU. This implies that the GBP appreciates
immediately after the referendum”.
“According to our estimation of Brexit
risk premium, EUR/GBP would most likely fall to 0.7420-0.7660
immediately after the referendum in case of a ‘stay’ outcome and we have
thus lowered our 3M target from 0.80 to 0.76 as the three-month horizon
is now after the election date”.
“Longer term, we project
further EUR/GBP downside driven by relative growth and relative monetary
policy. We target EUR/GBP at 0.74 in 6M and 0.75 in 12M but stress that
these forecasts are subject to significant digital risk”.
