Latest economic data show that the Eurozone economy, and specifically Germany, has continued to sour. Consequently, we expect EUR/GBP to edge back towards the 0.86 area in the weeks ahead.

While ECB policymakers will be reluctant to talk about the outlook for rate cuts as long as inflation remains above the 2% target, the market is beginning to speculate about such a move in Q2 2024.

On the assumption that the BoE indicates at tomorrow’s policy meeting that rates are set to remain on hold for some months, GBP is likely positioned to win back a little ground vs. the EUR.