EUR/GBP briefly touched a high around the EUR/GBP 0.9260 level on Monday, September 26 before pulling back below 0.90. Economists at Rabobank forecast the pair at 0.92 by mid-2023.

GBP remains a very vulnerable currency

“The UK is burdened with a record current account deficit/GDP ratio meaning that GBP is vulnerable to a downward adjustment if foreign investors are reluctant to fund the deficit.”

“UK’s fundamentals are currently characterised by high levels of debt and debt issuance, low growth/recession, high inflation and weak productivity. It is hardly an attractive backdrop for investors, which explains why GBP remains a very vulnerable currency.”

“We now see EUR/GBP trending higher to 0.92 by the middle of next year.”