EUR/GBP to decline towards 0.84 on less dovish tone from the BoE – Rabobank

Measured against the EUR, the pound continues to trade in a range. In the view of Jane Foley, Senior FX Strategist at Rabobank, a slightly more hawkish tone from the Bank of England is needed to see the EUR/GBP falling to the 0.84 level.

BoE retained much the same degree of caution on policy

“While EUR/GBP could creep to 0.84 by the end of this year, such a move would likely necessitate a slightly less cautious tone from the BoE”

“In the coming weeks, GBP is likely to draw some influence from forthcoming releases of May monthly GDP, production data and on July 14 of the June CPI inflation release. That said, with the Bank making it clear that last month’s upward surprise on the CPI inflation measure was not enough to significantly increase anxiety levels amongst policy-setters (with the exception of Haldane who has now departed the Bank), GBP bulls will likely to be more reluctant to be moved by another firm report.”

“The August 5 MPC meeting will generate some interest for the market insofar as this will be accompanied by a fresh round of forecasts. Assuming the economy continues to recover as expected, the Bank asset purchase programme is due to be completed at the end of the year and this may be sufficient to drag EUR/GBP lower on a 6-month view.”