Cable has managed a remarkable recovery over the course of recent sessions. However, over the coming months, economists at Rabobank expect that UK growth risks and a buoyant USD will be significant headwinds for the pound.
EUR/GBP: Potential for a gentle move towards 0.86 into the summer
“Textbooks suggest that the prospect of a more aggressive interest rate cycle from the Bank of England (BoE) is a positive near-term factor for the pound. However, insofar as this would increase the likelihood of a hard landing for the UK, upside potential for GBP on more rate rises could turn out to be limited.”
“For cable, we see risk of another attempt back down to recent lows based in part on UK growth concerns but also on the back of USD strength.”
“On the back of growth risks in China, energy security concerns in Europe and a hawkish Fed we see the prospect of a stronger for longer performance by the safe-haven USD.”
“In anticipation of a July interest rate rise from the ECB, we see the potential for a gentle move towards EUR/GBP 0.86 into the summer, though upside potential in the currency pair is likely to be limited into year-end in view of recessionary risks faced by the eurozone.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.