EUR/GBP seen at risk of dipping to 0.85 on a three-to-six-month view – Rabobank

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GBP dropped this week on the back of the BoE’s unchanged policy decision. Economists at Rabobank have revised down their six-month EUR/GBP forecast modestly.

Gloomy economic outlook for the Eurozone

The dip in GBP after the steady policy decision from the BoE this week has lifted EUR/GBP towards the top of its range, just shy of 0.87.

This month, the ECB revised lower its growth projections for the region significantly. However, these still seem optimistic compared with our own forecast for the Eurozone of technical recession in H2 2023 followed by a very shallow recovery next year. In view of this outlook, we see risk of EUR/GBP dipping to 0.85 on a three-to-six-month view. 

We continue to expect Cable to languish around 1.23 into year-end, with downside risk to this view on the back of the resilience of the US economy and a strong USD.