Danske Research discusses EUR/GBP outlook in light of revising its forecasts to account for a longer period of range trading around 0.85-0.87 in 3-12 months.
"With a medium to long Brexit extension and no reason to believe May’s deal will pass or that cross-party talks will prove successful any time soon, we think it is difficult to see much further GBP-strengthening near term. Hence, we have raised our GBP forecasts throughout the forecast horizon and look for EUR/GBP to remain range-bound at 0.85-0.87 in 1-3M. It is more difficult to predict what will happen when we get closer to the new Brexit deadline in October, but as we think a further extension is likely, we expect the cross to remain at 0.85-0.87 also in 3-12M," Danske argues.
"In case of a no deal Brexit by the end of October, we still expect EUR/GBP to move towards parity. If May’s deal passes, we would expect EUR/GBP to move down to 0.83. We target the cross at 0.86 in 1M and in 3M (prev. 0.83), 0.86 in 6M (0.82), and 0.86 in 12M (0.83).," Danske adds.