The EUR/GBP it fell above the 0.86 level this morning for the first time from mid to late July. Jane Foley, Senior Currency Strategist at Rabobank, believes that the pound may struggle to meet the EUR / GBP year-end forecast at 0.84.
Pound finds little support from BoE’s Saunders
Johnson’s strong parliamentary majority suggests that he, and therefore GBP, has a great cushion of protection against political uncertainty. That said, in terms of the added cost of a tax increase, many businesses and consumers may feel much less protected. “
“This morning, Bank of England hawk Saunders pointed out that the UK economy is probably quite close to pre-pandemic levels. However, he also commented that the recovery has been very uneven. He cautioned that it might be correct to think that rates could go up more or less over the next year. However, even he hopes that if the bank’s rate went up it wouldn’t do so much. Since Saunders did not sound as aggressive as in his speech at the end of July, his comments were not very supportive of the British pound. “
“While we don’t expect much lasting support for the EUR from this week’s ECB meeting, our year-end target of EUR / GBP 0.84 could prove too large for the pound.”