A note via Danske has a negative view for GBP, forecasting EUR/GBP to 0.88 on a 12 month time horizon,
In brief, citing:
- looming debt problems in the UK
- The UK government would have to start making significant reductions to the deficit and bigger reductions than what might take place in the euro area before we would start to turn less negative on GBP and we have a difficult time seeing how that could happen next year with elections coming up.
- UK economy to perform relatively worse than the euro area
- the conclusion of the Bank of England hiking cycle
And:
Near-term, we expect the cross to range trade on the back of little divergence in either the growth or monetary policy for rest of the year
Daily EURGBP chart
