In the opinion of economists at Scotiabank, the EUR/GBP could extend its advance towards 0.86 if the Bank of England (BoE) pushes back against rate expectations at next week’s decision.

EUR/GBP to test 0.85 in the coming days

“We see the EUR extending its gains versus the GBP to a test of 0.85 in the coming days and a move towards 0.86 (at least) if the BoE pushes back against rate expectations at next week’s rate announcement.”

“The run of Eurozone CPI releases that starts on Thursday with data from Germany and Spain would, all else equal, likely add fuel to the fire of ECB hike bets. However, there is a risk of a big miss versus forecasts that could check ECB expectations (and thus weigh on the EUR) owing to lower energy and gasoline prices in Spain and a tax cut on German fuel.”