EUR/GBP has bounced back above 0.84. According to economists at Nordea the current fallback in sterling should be short-lived. Subsequently, the expect the EUR/GBP to plunge towards 0.81 by end-2022.

Bank of England to support sterling with further rate hikes

“The BoE did hike for a third meeting in a row and more hikes will come later this year. Hence, we favour sterling to restrengthen versus the euro and probably already during Q2 if or when we get a pause or a lasting solution between Ukraine and Russia.” 

“The BoE has shown that its will act quickly and that it is determined to fight inflationary pressures in the British economy. This ought to support sterling.”

“We expect EUR/GBP to move towards 0.81 by the end of the year.”