According to Rabobank experts, cable could continue to suffer in the next months if the USD remains strong, while EUR/GBP can creep towards the 0.84 level over the next six months. This presupposes that the economic backdrop has improved sufficiently to eliminate some of the Bank of England’s caution.
“Despite evidence that the vaccination program has weakened the association between vaccination and hospitalization, this has the potential to affect consumer trust and activity. This is expected to support the Bank of England’s cautious tone and central view that this year’s CPI inflation surge will be temporary. As a result, we expect the Bank to maintain stable rates until 2023.”
“Although the Bank of England’s quantitative easing program is set to finish by the end of the year, EUR/GBP may take some time to find the incentive to break lower.”
“UK monthly May GDP and production figures, anticipated later this week, could give the pound some new direction.”/n
