EUR/GBP: Everything has turned against the pound – Danske Bank

Analysts at Danske Bank see the EUR/GBP pair trading lower in coming months due to most factors are working against the sterling now.

Key quotes

“Time spent fighting the coronavirus by both the UK and the EU means less time to negotiate a deal before the end of the year, increasing the risk of a big trade shock by 1 January 2021. We forecast EUR/GBP at 0.93 in 1-3M.” 

“We will probably see some of the current risk premium reverse and we expect the cross at 0.90 in 6M.” 

“Our baseline is also that we will have a simple trade agreement by the end of the year, which should send EUR/GBP lower again and we see 0.87 in 12M.”