GBP dropped this week on the back of the BoE’s unchanged policy decision. Economists at Rabobank have revised their six-month EUR/GBP forecast modestly.

The gloomy economic outlook for the Eurozone

The dip in GBP after the steady policy decision from the BoE this week has lifted EUR/GBP towards the top of its range, just shy of 0.87.

This month, the ECB revised its growth projections for the region significantly. These nevertheless seem optimistic when compared to our own prediction for the Eurozone of a technical recession in H2 2023 and a very slight recovery the following year. In view of this outlook, we see a risk of EUR/GBP dipping to 0.85 on a three-to-six-month basis.

We continue to expect Cable to languish around 1.23 into year-end, with downside risk to this view on the back of the resilience of the US economy and a strong USD.