GBP/EUR likely to trade around 1.16 by end-2017, says Lloyds bank
Source: FxWire Pro - Commentary / 15 May 2017 18:21:19 Eastern Standard Time
Given that the euro is rising, the British pound has more than kept its own strength against the euro, briefly rising above EUR 1.20 after PM May’s election announcement, noted Lloyds Bank in a research report. As both the regions are expected to keep their policy rates on hold in 2017, monetary policy developments are not expected to be the driving force behind the currency pair in the coming twelve months.
There is a risk that the Bank of England might begin discussing the possibility of further policy tightening, especially if the economy is likely to hold up well and ‘core’ inflation moves higher. Meanwhile, with European data continuing to rebound, there is a risk that the European Central Bank might also begin to sound less dovish. In all, the possible upside for sterling appears restricted, with the risk that GBP/EUR comes under additional pressure in response to solid euro area data and once the Brexit talks start in earnest.
“Our central expectation is for GBP/EUR to end the year around 1.16. Given the prevailing political and economic risks, there is scope for significant bouts of volatility in the interim”, added Lloyds Bank.© FxWire Pro 2018. All rights reserved. The FxWire Pro content received through this service is the intellectual property of FxWire Pro or its third party suppliers. Republication or redistribution of content provided by FxWire Pro is expressly prohibited without the prior written consent of FxWire Pro, except for personal and non-commercial use. Neither FxWire Pro nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.