The euro has pulled back against the pound this week to put an end to the three-week rally seen earlier in June. The Rabobank FX Analysis Team, however, remains bullish on the euro expecting the uptrend to resume, aiming to 0.9200.
“The long-anticipated re-opening of England’s hospitality sector and other service-related businesses on July 4 has been accompanied by a somber warning from PM Johnson that the country is ‘not out of the woods yet’.”
“The re-opening should help staunch the wounds of hundreds of businesses. However, the results of several recently published surveys on the UK economy provide grim reading. When this backdrop is layered on top of Brexit uncertainty and the ongoing discussion about negative interest rates in the UK it is little surprise that the pound has been the worst-performing G10 currency over the past month.”
“Looking ahead, both economic and Brexit discussions are likely to feature heavily in the performance of the pound. The longer investors have to wait for signs of compromise from Brexit negotiators, the more chance there is that GBP will slip lower. In the absence of solid progress on a trade deal, we expect EUR/GBP to edge towards 0.92 on a 1-month view.“