EUR/GBP could still head higher in the near term – Danske Bank

The Bank of England will announce its next monetary policy decision on August 4. According to analysts from Danske Bank, the EUR/GBP could move higher if the BoE does not hike interest rates as it is priced in by investors. They forecast EUR/GBP at 0.85 in one month, at 0.86 in three months, at 0.85 in three months and at 0.84 in a year. 

Key Quotes: 

“Over the past month, EUR/GBP moved back below 0.85, as GBP benefitted from the broad USD appreciation (GBP/USD is now trading below 1.19).”

“We still see a case for a slight move higher in EUR/GBP near-term if we are right that the Bank of England will not hike as aggressively as priced in by investors.”

“Looking further ahead, on the one hand, the positive USD environment is usually benefitting GBP relative to EUR. On the other hand, relative rates now seem supportive for EUR relative to GBP. Overall, we still expect the cross to trade around 0.84 in 12M.”