While the UK’s growth outlook has suffered a significant setback relative to the more optimistic tone that was prevalent in the market after last July’s general election, the EUR also faces headwinds of its own, Rabobank's FX analyst Jane Foley notes. 

EUR/GBP to trade in the 0.83-0.84 region in the months ahead

"The EU has promised to take countermeasures on the US after President Trump announced tariffs on steel and aluminum. That said, EU politicians are likely poised for further action from Trump which could endanger the region’s fragile growth outlook further."  

"Since US data indicate the presence of a trade surplus with the UK (contrary to ONS data), further tariffs would appear less of a threat for Britain. On balance, we continue to expect a modest outperformance of GBP vs. the EUR this year, though our confidence in GBP has been shaken by the downward revision to the UK growth outlook and last month’s shake-out in the gilt market."  

"Our year end forecast is EUR/GBP0.8150, though we see scope for a prolonged period of range trading in the EUR/GBP0.83-0.84 region in the months ahead."