Uncertainty about the Bank of England ‘s (BoE’s) future course is hig. Economists at Commerbank expect the “Old Lady” to disappoint market expectations. Thus, EUR/GBP is set to trend higher until the end of the year.
Market expectations could be disappointed
“The BoE is continuing its gradual tightening of monetary policy. However, it is likely to act less restrictively than expected by the market. The pound should suffer increasingly from this.”
“Another factor weighing on the pound is that the ECB is also likely to start its monetary policy U-turn in July. We therefore see EUR/GBP higher until the end of the year.”
“Next year, we see scope for lower levels in EUR/GBP because the BoE is likely to continue its rate hike cycle somewhat longer than the ECB.”
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