Gbpeur To Move Lower Danske Bank

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Gbpeur To Move Lower Danske Bank

Gbp/Eur To Target 1.15 During Next 12 Months

According to Danske Bank, the GBP/EUR is expected to target the 1.15 handle during the next 12 months. For now, the GBP/EUR pair is seen at multi to month lows amid geopolitical tensions and risk appetite.

The 6 to 12 month forecast by the Danske Bank reveals that the GBP/EUR is highly likely to drop from its current levels. The reason for this weakness is the fundamental vulnerability in the UK and a hostile investment environment around the world.

Danske Bank Remains Cautious Over Uk Economy

Danske is also very cautious about the overall situation of the UK economy. They added that the labor market data as of late is weak, which shows not everything is alright with the economy.

As for the BoE policy, Danske believes that a rate cut is still on the cards. However, they also highlighted that faster rate cuts will actually weaken the Pound yield.

In the short term, Danske doesn't see any rate cuts from the European Central Bank. So, the bigger picture is that the BoE is expected to cut rates while the ECB is expected to delay it.

It's also worth noting that the UK is facing a current account deficit, and it's a persistent one. This is also one reason which has made the GBP very sensitive to the global risk.

Looking ahead, the bank believes that the general environment for global investments will remain defensive. The reason for this is increased uncertainty and a widening of the credit spreads.

On the other hand, the European Union is enjoying a current account surplus, which puts the euro at an advantage.

Also, the fiscal concerns in the UK are expected to return, while the fiscal policy of the Eurozone will be more stable. So, all of these hints at the fact that GBP will weaken and the EUR will strengthen in the next 10 to 12 months.

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