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Economists at Credit Suisse still see scope for the EUR/GBP pair to move lower, targeting 0.8400, as the pound is still cheap on longer-term metrics.

The UK leads the push to herd immunity

“In terms of administering covid vaccine first doses, the UK stands as the clear leader among major economies, even if it is lagging when it comes to second doses. This unusual approach of getting first doses out as fast as possible seems to have worked, based on collapsing cases and especially hospitalization numbers.”

“The market has given up on the idea of negative base interest rates being a serious risk in the UK, which was a key driver of GBP’s revival in Q1.”  

“The 5% decline seen in EUR/GBP in Q1 is among the strongest declines seen in the history of the cross. This reflects clear divergence in growth prospects seen in Q1 between the UK and euro area relative to expectations at the end of 2020. But this also reflects a starting point which was one of the weakest GBP levels seen since then too. This suggests more GBP gains are possible, and we would look to sell rallies towards EUR/GBP 0.8750, targeting 0.8400 medium-term (stop: 0.8840).”