FXStreet notes that the pound is the best performing G10 currency on a one day view on the back of both Brexit-related optimism and on hope that the UK economy can benefit significantly from vaccination against COVID-19. Nonetheless, economists at Rabobank expect the EUR/GBP pair to stabilize around the 0.88-0.89 area in the coming months.

“EUR/GBP is currently not trading far above the November low around 0.8861. This area provided decent support both in June and in September, indicating that a break lower could pave the way for a move towards the 0.87 area.”

“GBP still has a lot of hurdles to clear before investor confidence can increase another couple of notches and UK politics has the potential to sour the mood. We are expecting that EUR/GBP will trade mostly in the 0.88/0.89 region in the coming months.  “

“There is scope for a relief rally in GBP on news that a deal has been signed, though the failure of the UK and EU to agree a comprehensive deal will likely limit upside potential.”