The spike in the EUR following the February European Central Bank (ECB) press conference significantly outweighed the gains made by the pound on the back of the Bank of England (BoE) policy meeting. Economists at Rabobank maintain their three-month EUR/GBP 0.85 forecast.

ECB is no longer ruling out the possibility of a rate hike this year

“The ECB is no longer ruling out a rate hike this year. We have been expecting that the EUR would pick up ground this year as focus switched to ECB policy tightening. However, the move has come earlier than we had been expecting.”

“Despite the hawkish overtones from the BoE, we still see GBP as vulnerable medium-term as the increase in the cost of living bites.”

“We retain our three-month forecast of EUR/GBP 0.85.”