In this context, a prospect is a possible future event that you imagine in your mind. Something that is daunting is difficult to deal with or to accomplish. In particular, daunting means that the idea of doing the thing is demoralizing or intimidating. Just thinking about doing it makes you tired or nervous. It seems like it will be very difficult or impossible to do. So, a daunting prospect is some possible event that you imagine to be very difficult or complicated or even scary.

Daunting prospect means not very bright prospect, so that it may turn out to be intimidating and discouraging. Starting a new job can be a daunting prospect -> the job propect is intimidating It is a daunting prospect to ask for a loan -> asking for a loan is discouraging