EUR/GBP has been volatile lately, but continues to trade around 0.85. Economists at Danske Bank remain bullish on the pound as the USD-positive environment is usually also benefiting sterling and keep their EUR/GBP forecast intact at 0.83 in 12 months.

BoE is about to start tightening monetary policy

“Like the Fed, the Bank of England (BoE) is about to start tightening monetary policy. QE bond buying is set to end by the end of the year and since our last update, investors have started to price in more aggressive rate hikes from the BoE.”

“We still have a bullish view on GBP, as the ‘positive USD’ environment is usually also benefiting GBP. We target 0.83 in 12M.”

“Near-term, the too aggressive Bank of England pricing may put some upward pressure on EUR/GBP, so we have lifted our 3M target to 0.85 (from 0.84).”