There is scope for the EUR/GBP pair to edge towards 0.84 by the end of the year, according to analysts at Rabobank. They don’t expect a break-out any time soon. They point out that against a backdrop of optimism with respect to the Eurozone outlook, and the appearance of a few potential headwinds in the United Kingdom, outperformance could prove to be tough for the pound in the coming weeks.
“The first quarter of this year saw a confluence of positive GBP fundamentals. While this encouraged speculators to rebuild long positions in the pound, the impact has dwindled in recent months. The Eurozone’s vaccination programme has being catching up with that in the UK, BoE policy makers remain very cautious on policy and Brexit has produced various hiccups.”
“In terms of policy, we expect both the BoE and the ECB to retain a cautious position with both set to push against any talk of tapering for the time being.”
“On a break above the 50 day SMA at 0.8630, EUR/GBP could head towards resistance at 0.8658. To break lower from its current trading range EUR/GBP may first need to see speculation emerging about a shift in BoE policy. This could be some time in coming. Support in the 0.8560 area ahead of the 0.8472 April low.”
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