FXStreet reports that economists at Rabobank continue to see EUR/GBP at 0.85 by year-end while UK politics concerning the issues of Brexit and sleaze may impact the performance of the pound.
“How much support the pound can garner from a potential BoE rate hike in the coming months will to some extent depend on whether a move is judged to be warranted. In the wake of mounting headwinds to growth in the UK, it appeared at the time that market participants were wary of a policy mistake from the Bank. This suggests that GBP may have struggled to rally even if the Bank had raised rates last week.”
“The fact that EUR/GBP has never come close to returning to the levels held prior to the 2016 referendum on EU membership suggests that Brexit-related uncertainty is largely already in the price.”
“The accusations regarding sleaze in the Tory party and the government’s U-turn last week over parliamentary standards have taken a toll on the PM personal poll rating. Given the government’s strong majority and absence of any near-term election, this may not translate directly into a softer pound near-term unless the situation worsens.”
“We retain our year-end EUR/GBP forecast of 0.85.”