British Pound: Sterling pressured into autumn against Euro – Rabobank
Rabobank's Senior FX Strategist Jane Foley discusses recent British Pound (GBP) weakness versus the Euro (EUR), linking it to reduced Bank of England (BoE) tightening expectations and political developments under UK Prime Minister Burnham.
British Pound faces pressure as it weakens against the Euro, according to Rabobank's Senior FX Strategist Jane Foley. The decline is attributed to reduced expectations of Bank of England rate hikes and political events under the leadership of UK Prime Minister Burnham. The fiscal flexibility expected ahead of the October 28 budget, combined with potential nervousness, suggests potential downside pressure on the pound as summer ends.
Foley suggests buying EUR/GBP on dips, with a target near the 0.8550 level. A break above the recent high of 0.8588 could boost upside potential. The upcoming budget could impact the gilts market and GBP, potentially creating friction into autumn. Despite the budget's shadow on the pound post-summer, RaboResearch believes the market has overestimated the risk of BoE rate hikes.
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