EUR/GBP expected to stabilize near term – Danske Bank

Morten Helt, Senior Analyst at Danske Bank, sees the European cross stabilizing in the short term horizon.

Key Quotes

“EUR/GBP continues to hover just above the 0.92 level and thus slightly above the near term range of 0.90-0.92”.

“We still expect EUR/GBP to stabilise near term due to (i) a softer tone from Draghi today and (ii) as UK macro and interest rates should be less GBP negative going forward given the adjustment process of lower growth and rate hike expectations is maturing”.

“That said, GBP could continue to trade with a moderate negative bias in coming months and thus risks remain skewed to the upside for EUR/GBP in the short and medium term”.

“Technically, the cross has entered unchartered territory and a break of the high from 23 August at 0.92364 could open for a further rally and possibly a test of the next technical resistance level at 0.9365 (the high from the ‘GBP flash crash’ on 7 October 2016)”.