EUR/GBP still seen rangebound – Danske Bank

Mikael Milhoj, Senior Analyst at Danske Bank, believes the European cross could extend the sideline theme for the time being.

Key Quotes

“As we predicted, the rally in GBP on the back of the highly expected rate hike from the Bank of England yesterday proved short-lived and EUR/GBP has bounced back above 0.89 again”.

“The market is now pricing that the Bank Rate will reach 1.25% in August 2021, which is consistent with our expectations of one hike per year”.

“Hence, UK yields are not likely to be a positive for the GBP near term and we look for EUR/GBP to remain range bound (most likely within 0.875-0.895) near term, with Brexit uncertainty expected to remain the key source of volatility.