There is little scope for outright optimism for the UK economy in the months ahead. That said, having been wrong-footed on the scale of the downturn last year, various commentators see potential that the UK could again produce a not as bad as expected performance. This week’s data will be key in either raising or negating these prospects. 

Either way, we see Germany’s poor economic outlook as allowing GBP to claw back a little ground vs. the EUR this year.

Given the difficulties facing the German economy, we see scope for EUR/GBP to drift down to 0.84 in the latter half of this year.