EUR/HUF likely to trade around 309 by end-2017, says Lloyds Bank

The EUR/HUF pair moved upwards to consolidate closer towards the midpoint of its 305-314 year-to-date range. Additional unconventional easing by the Hungarian central bank has been linked to the shift higher. However, the HUF appears to be well anchored due to Hungary’s solid current account position and investment grade credit rating, noted Lloyds Bank.

However, the risks to the baseline forecasts have shifted to the upside in recent weeks. Hungary’s central bank appears in no rush to hike rates, despite headline inflation being near target. Moreover, the Hungarian forint is exposed to several political risks, including the EU budget impact of Brexit and a tense relationship with other EU members. But on a relative basis, the FX option market continues to be biased in favour of HUF strength.

“We expect EUR/HUF to end the year around 309”, added Lloyds Bank.