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Fiscal and political risks cap euro gains versus British pound
Rabobank has cut its EUR/GBP outlook, forecasting the pair near 0.85 over the next three months.
Rabobank Senior FX Strategist Jane Foley said EUR/GBP upside is likely limited as divergent fiscal and political conditions persist across Europe and the UK, with France facing a tougher backdrop than the UK, according to FXStreet.
FXStreet notes Foley pointed to UK budget concerns that are already reflected in the British pound, and said the euro has room to weaken further ahead of the UK budget on October 28.
Rabobank also revised lower its EUR/GBP forecasts, now looking for the pair around 0.85 over a three month horizon, and FXStreet reported Foley expects EUR/GBP volatility to remain elevated in October.
Foley added that, while Chancellor Healey has a difficult task on October 28, conditions in the UK may leave GBP less vulnerable than the euro facing France's political and fiscal issues, FXStreet said.