EUR/GBP holds near 0.85 as UK outlook softens – Danske Bank

EUR/GBP remained close to the 0.85 mark during yesterday's session, Danske Bank's FX analysts report.

Muted UK growth and inflation risks weigh on BoE

"Price action continues to be dominated by risk appetite as domestic data releases are scarce the coming week ahead. While retail sales continue to surprise to the topside the past months, PMI data hints at more tentative signs of a more stagflationary environment in the UK."

"Service sector slipped back into the contractionary territory while activity in the manufacturing sector remains muted. Price pressures increased in both input and output priced. The more muted growth outlook and higher price components spells trouble for the BoE."

"There seems to be a dovish tone within the MPC, which we expect repeated at the meeting next week. We forecast EUR/GBP towards 0.88 on a 12 month horizon."