Danske Research discusses EUR/GBP outlook and maintains a structural bullish bias over the coming months.
"Yesterday, the initial move lower in EUR/GBP on the back of the story about increased UK gilt sales this year and more expansionary fiscal policy was short-lived and EUR/GBP continues to trade at 0.85. We still think EUR/GBP will move higher from here first driven by a repricing of the Bank of England, which we expect to soon cut the Bank Rate by 25bp, and later driven by lack of progress in the Brexit talks on the future relationship, which are only about to start," Danske notes.
"Eventually, we expect the cross to move lower again when a free trade deal is finally in sight. We target 0.87 in 3M, 0.89 in late Q3/early Q4 and 0.84 in 12M," Danske adds.