EUR/GBP to move back to 0.87 by late-2021 – Rabobank

In the year to date, the pound has gained ground versus both the US dollar and the euro. Economists at Rabobank forecast the EUR/GBP pair around the 0.89/0.88 area in the coming months while a return to the 0.87 level is not expected until later in the year.

Key quotes

“The forthcoming BoE meeting on February 4 may bring some additional colour to the inflation outlook in the UK, though for now, the market appears to be more confident that a negative Bank rate will be avoided.”

“The fact that the UK’s lockdown could extent into March and given evidence that its rapid vaccine programme is still a way off from halting the pandemic in the country, we see scope for additional gains in the pound to be limited near-term.” 

“We retain our forecast that EUR/GBP is likely trade in the 0.89/0.88 region in the coming months and may not see a return to the 0.87 level until later in the year.”