Danske Bank FX Strategy Research outlines 3 scenarios for the outcome of the UK elections on Thursday and the potential target for EUR/GBP for each of them:
1- (Base Case) “We maintain the view that if Theresa May consolidates her majority substantially it would be GBP positive. We are looking for EUR/GBP in a trading range of 0.82-0.8650 in this scenario.
2- If the Conservatives remain in power with an unchanged majority, we expect a relief rally in GBP targeting EUR/GBP at 0.84 post the election. In this scenario we expect EUR/GBP to continue to trade within the current range of 0.84-0.88.
3- If the Conservatives lose their majority, but remain in power (hung parliament), we expect a knee-jerk bounce in EUR/GBP for a possible test of 0.90. We expect EUR/GBP to settle in the 0.84-0.88 range after some time in this scenario,” Danske argues.
Source: Danske Bank Research
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