The world's largest foreign exchange dealer reckon the Pound-to-Euro exchange rate is pointed lower over the course of 2018.
The Euro will outperform the US Dollar next year, supported by continued economic growth in the Eurozone whilst new US tax reforms and Federal Reserve policy will ultimately disappoint.
The British Pound is forecast to rise against the Euro over coming months thanks progress in Brexit talks as well as rising U.K. real yields relative to Eurozone yields.
A cinematic death of Eurozone breakup risk, the second leg of ECB tapering and speculation of an interest rate rise could all drive the Euro higher in 2018.
Strategists at TD Securities and MUFG tell clients the conditions are now in place for the Pound to rise against the Euro.
2018 should see Brexit talks between the U.K. and E.U. steadily progress, and this will lead to a strong upswing in the Pound-to-Euro exchange rate.
UK economic growth is slowing at a time when the recovery on the continent is gaining momentum. This could push the Pound-to-Euro to new lows in 2018.
“Given a more negative view of Brexit talks, an increased risk premium on the GBP is reasonable" - say S.E.B. justifying decision to reverse forecast upgrade made in September.
Improving sentiment surrounding Brexit and the UK economy has seen another global financial services provider upgrade their forecasts for the British Pound against the Euro.
The Pound-to-Euro exchange rate could rise in the short-term but should ultimately succumb to downside pressures as the tail-winds provided by the Bank of England fade.
New research shows the Euro-to-Dollar exchange rate is liable to shoot above its fair-value level over coming months, and stay overvalued for a considerable period of time.
The Pound is forecast to rally back into the mid-1.40s versus the Dollar and the 1.11750s versus the Euro (EUR/GBP mid-80s), says a leading currency analyst.
Should current gains extend above 1.11, a fall to parity in the GBP/EUR exchange rate becomes increasingly unlikely.
Brexit related uncertainty will keep a lid on the Pound over the coming months but, perhaps more interestingly, it will also place a floor under the Pound to Euro rate.
Deutsche Bank, while not optimistic on Sterling’s broader prospects against the Euro for the remainder of this year, have warned of a near-term bounce in GBP/EUR.
The Pound and Euro are unlikely to reach parity in value argue analysts at ING Bank N.V. who say the Pound has become “an easy target for currency markets.”
J.P. Morgan made a call on EUR/USD nine months ago, and they were correct. But, the extent of the Euro’s climb has caught analysts by surprise.
Those wanting a stronger Pound against the Euro will have been spooked by the recent views coming out of some of the world’s most esteemed research houses.
Earlier this week we reported that Morgan Stanley had dropped their moderate view on the Pound to Euro exchange rate’s outlook and had turned decisively more bearish.
The Euro’s impressive rally might be due a pause, but this will not see technical analysts at Credit Suisse deviate from their bullish stance on the single-currency.
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