Morten Helt, Senior Analyst at Danske Bank, sees the cross slipping towards 0.7300 in a year’s view.
Key Quotes
“Given the high uncertainty surrounding the EU referendum, we see risks skewed to the upside for EUR/GBP ahead of 23 June”.
“A substantial Brexit risk premium has already been priced into the FX option market, and further significant GBP selling pressure is not likely to be seen before we come closer to the referendum”.
“However, volatility is likely to remain high and EUR/GBP is likely to be very sensitive to news flow, changes in polls and so on”.
“We forecast EUR/GBP at 0.80 (0.79) in 3M and think it may inch even higher ahead of the referendum day. 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 GBP should appreciate immediately after the referendum. 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 0.73 in 12M but stress that these forecasts are subject to significant digital risk”.
(Market News Provided by FXstreet)