EUR/GBP: A MOVE BACK TO THE YTD LOW OF 0.8493 AND BELOW LOOKS PLAUSIBLE – MUFG
The British Pound can benefit as the BoE has opened up a gap relative to the ECB.
Scope for GBP outperformance
We doubt that lack of divergence will be maintained and see the BoE caution as far more justified and warranted. It suggests scope for GBP outperformance and we see downside risks to EUR/GBP from here.
A move back to the year-to-date low (0.8493) and below looks a more plausible scenario to us over the coming months.
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