1406 GMT - Sterling could weaken against the euro as the Bank of England could keep interest rates unchanged this year while the European Central Bank raises rates further, Danske Bank's Kirstine Kundby-Nielsen says in a note. Danske expects the BOE to hold rates steady until next summer before cutting rates, while it sees the ECB delivering another two rate rises in October and December. The U.K. economy remains fragile and there is more scope for a significant repricing in BOE rate expectations compared to ECB, Kundby-Nielsen says. There are also fiscal risks ahead of the October U.K. budget, she says. The euro trades steady at 0.8589 pounds and Danske expects it to reach 0.88 in six months.
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