“The fact that the Bank of England outperformed the ECB in terms of normalization of policy has motivated our expectations that the EUR / GBP could move towards 0.84 by the end of the year,” said analysts at Rabobank.
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“Unlike the ECB, the Bank of England’s asset purchase program will soon be complete and the debate on a rate hike in 2022 is alive in the market (although we are in favor of 2023). On the contrary, even if the The ECB’s emergency PEPP program is withdrawn in March, the PPP purchase plan is likely to be increased. It follows that there are no expectations of an ECB rate hike in the short term. “
“That said, this news comes at a price and our forecasts for a moderately firmer British pound against the euro in the fourth quarter will be in jeopardy if the UK economy and expectations related to Bank of England policy lose steam.”
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