A spate of UK economic data is due for release during the course of the week and this could be instrumental in providing fresh direction for the pound, according to economists at Rabobank. They see EUR/GBP at 0.85 on a three-month view. 

GBP could be vulnerable if the market back tracks on BoE hikes forecasts

“The combination of this week’s UK economic releases is likely to set the tone for the pound near-term. Assuming the data come in close to market expectations the GBP may be able to claw back a little ground vs. the EUR near-term since ECB officials have been actively reinforcing the cautious, data-driven nature of their policy outlook.” 

“By the middle of the year, we expect the GBP will have lost its footing as the money market reassess the outlook for BoE policy.” 

“Our three-month EUR/GBP forecast is 0.85.”