On a one-month view, the Pound is still the best performing G10 currency. However, GBP is now priced for a better UK economic outlook, leaving vulnerable to disappointing data, economists at Rabobank report.

GBP may now be more vulnerable to disappointments 

“GBP’s stella performance in recent weeks is drawn from a series of better than expected UK economic data. That said, while this has justifiably led to a re-appraisal of GBP, it is possible that this move has now run its course. After all, while the economic outlook for the UK in 2023 is better than it was, it is far from strong and the recent adjustment in positioning means that GBP may now be more vulnerable to disappointments.”

“We maintain the view that GBP is likely to slowly grind lower vs. the EUR although we recently pushed out our EUR/GBP 0.90 forecast to nine months reflecting the less bad UK economic backdrop.”