Euro coins are seen in front of a displayed stock graph in this photo illustration taken in Zenica, Bosnia and Herzegovina, June 30, 2015. REUTERS/Dado Ruvic

LONDON (Reuters) - U.S. investment bank Morgan Stanley raised its currency forecasts for the euro on Friday, predicting it would hit $1.25 early next year and be one-for-one versus Britain’s pound for the first time in its 18-year history.

Morgan Stanley also cut its forecast for the Mexican peso to 20 per dollar MXN= in the third quarter of next year, saying it would come under pressure ahead of the country's elections.