British Pound: Range trading outlook against Euro – Rabobank

Rabobank's Senior FX Strategist Jane Foley comments on the recent performance of the British Pound (GBP), highlighting that it is currently the top performing G10 currency on a one-day basis, but is relatively average in the longer term. Foley anticipates the EUR/GBP currency pair to fluctuate within a range in the coming weeks, with a modest upward bias expected later in the year.

This outlook is primarily driven by fiscal realism and a reduced likelihood of additional Bank of England (BoE) rate hikes. The British Pound has been performing well this morning, ranking as the top G10 currency in a 1-day view, although its performance in other time frames is described as 'middling'. Recent UK economic data has been better than expected, indicating that both the UK and Eurozone economies are 'resilient' through Q2 and into the summer.

Despite the recent positive developments, Rabobank's central view remains that the Monetary Policy Committee (MPC) will not raise interest rates this year. The market still perceives some risk of rate hikes, which could negatively impact the pound if the actual scenario unfolds. Rabobank currently forecasts a 3-month EUR/GBP rate of 0.87.