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EUR/GBP seen rangebound as UK politics approach Oct. 28 budget

Rabobank expects the pound to stay cautious after stronger UK GDP support, with more than 100 bps of UK policy tightening already priced over the next 12 months.

Reported · Written up by our desk · Major Pairs

FXStreet reports Rabobank’s RaboResearch Global Economics & Markets FX Strategy team expects EUR/GBP to remain rangebound, citing UK political factors, growth conditions, and monetary policy dynamics.

The team said the pound recently gained support from better-than-expected UK GDP, but it expects GBP bulls to remain cautious ahead of the October 28 budget, when market expectations could shift.

Rabobank pointed to Eurozone growth headwinds and political risks in France and Germany, which it said could limit EUR upside against the pound in the coming weeks.

The outlet also noted Rabobank’s view that although higher short-term interest rates help currencies, there is little room for sustainable GBP gains because more than 100 bps of policy tightening is already priced in on a 12-month view, making it more likely the pound could soften if rate hike risks are scaled back.

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