GBP: Looking For Sterling To Move Sideways Around Current Levels But EUR/GBP Likely Higher – Danske

The British pound had a turbulent 2019 with Brexit and the UK elections causing it to swirl. Where next in 2020?

Danske Research discusses GBP outlook and adopts a neutral bias on GBP/USD and bullish bias on EUR/GBP in the medium-term. 

Near term, we look for Sterling to move sideways at current levels. Although we expect a subdued economy to provide weakness in H2, this is not key to current EUR/GBP pricing.

To take EUR/GBP notably lower, three things need to happen: (1) expansive fiscal policy must be enacted; (2) we need a rebound in soft and hard data and (3) the withdrawal agreement needs to be approved by Parliament.

We remain skeptical as to the ease of reaching a UK-EU foreign trade agreement, but such concerns are unlikely to affect EUR/GBP until H2 next year,” Danske adds.

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