EUR/GBP has reached the highest level since May. Economists at Danske Bank analyze the pair’s outlook.
GBP headwinds to persist
We expect the UK economy to perform relatively worse than the Euro area and the conclusion of the Bank of England hiking cycle to weigh on GBP.
Near-term, we expect the cross to range trade on the back of little divergence in either the growth or monetary policy for the rest of the year.
We lift our forecast profile for EUR/GBP slightly higher to 0.89 over the coming 12 months in light of the higher spot.
Forecast: 0.87 (1M), 0.88 (3M), 0.89 (6M), 0.89 (12M)