The market consensus is expecting EUR/GBP to drift higher this year, but there is some evidence that forecasters’ pessimism over the outlook for GBP has become ingrained.

There has been plenty of justification for a lack of optimism with respect to both the Pound and the UK economy in the past few years, but Germany’s economy has fared worse since the pandemic.

While it is still difficult to paint a glaringly optimistic picture of the outlook for GBP, we see potential for EUR/GBP to tick lower to 0.84 on a 12-month view, in part due to the poor position of the German economy.