Euro Forecast

New research shows the Euro-to-Dollar exchange rate is liable to shoot above its fair-value level over coming months, and stay overvalued for a considerable period of time.

The Pound is forecast to rally back into the mid-1.40s versus the Dollar and the 1.11750s versus the Euro (EUR/GBP mid-80s), says a leading currency analyst.

Should current gains extend above 1.11, a fall to parity in the GBP/EUR exchange rate becomes increasingly unlikely.

Brexit related uncertainty will keep a lid on the Pound over the coming months but, perhaps more interestingly, it will also place a floor under the Pound to Euro rate.

Deutsche Bank, while not optimistic on Sterling’s broader prospects against the Euro for the remainder of this year, have warned of a near-term bounce in GBP/EUR.

The Pound and Euro are unlikely to reach parity in value argue analysts at ING Bank N.V. who say the Pound has become “an easy target for currency markets.”

J.P. Morgan made a call on EUR/USD nine months ago, and they were correct. But, the extent of the Euro’s climb has caught analysts by surprise.

Those wanting a stronger Pound against the Euro will have been spooked by the recent views coming out of some of the world’s most esteemed research houses.

Earlier this week we reported that Morgan Stanley had dropped their moderate view on the Pound to Euro exchange rate’s outlook and had turned decisively more bearish.

The Euro’s impressive rally might be due a pause, but this will not see technical analysts at Credit Suisse deviate from their bullish stance on the single-currency.

The Euro to Dollar exchange rate hit another new high this week having achieved 1.1913 in late North American trade on August 2.

The Euro’s impressive advance against the Euro has the legs to continue, but not before a period of consolidation takes place say analysts at Rabobank.

UniCredit have announced a material upgrade to their forecasts for the Euro against the Dollar while they maintain a bearish view on Pound Sterling.

Kit Juckes at Societe Generale believes the conditions are ripe for the Euro v Dollar exchange rate to rush to 1.20 this summer and make life difficult for the team at the European Central Bank.

Why analysts don’t believe Sterling requires a massive downgrade against the Euro as is the case for EUR/USD because the risk of a Pound-positive surprise remains elevated.

A big upgrade for the Euro to Dollar exchange rate has been announced by Danske Bank who believe a perfect combination of events have transpired over recent weeks that will allow the single-currency to race higher.

The Euro to Pound Sterling exchange rate could continue declining if analyst Robin Wilkin at Lloyds Bank is correct.

“We are more positive on the euro, with upside to the dollar and sterling” - Deutsche Bank’s house view.

Euro Strength: Too Much, Too Soon?