The Nomura Economists expect EUR/GBP to rally strongly towards 0.88 and possibly 0.90 by the end of the year.
The British CPI could surprise to the downside in the second half of the year
Markets have moved away from trading based on rate differentials, which would suggest GBP strengthening, and are now more focused on growth expectations. Global surveys have been disappointing of late, causing high beta currencies to underperform.
The market is currently pricing the Bank of England rate hikes by the end of the year at 121 basis points, which is in contrast to our forecast of 75 basis points.
Our leading indicators suggest that British CPI could surprise to the downside in the second half of the year.
Factoring in overhyped rate hikes and the possibility of a UK CPI surprise downside, we believe that EUR/GBP is likely to rise gradually, reaching levels around 0.88 or even 0.90 by the end of the year.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
