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The sharp fall in GBP vs. the EUR in March indicates that the pound is vulnerable to a drop of investment flows during crisis times, according to economists at Rabobank.

Key quotes

“For many overseas investors the risk of disorder at UK borders next year could threaten to lengthen what is likely to be a sharp UK recession this year on the back of the crisis lockdowns.”

“The UK maintains a current account deficit while the Eurozone has a healthy surplus. The EUR, however, is far from immune to political uncertainty. Disagreements on the topic of debt mutualization threaten to re-open cracks in the bloc’s fragile coherence on fiscal issues.” 

“ On balance, we see EUR/GBP trading around 0.88 on a 3 month view.”