The bearish trend observed on the EUR/GBP this week, which has pulled the pair to its lowest level since early March is likely to be temporary, according to the analysts at Rabobank.
Key quotes
“Month-end flows may have been partly responsible and the weight of shockingly poor Eurozone economic data releases was also likely a contributing factor. The pound, however, faces some disastrous economic news of its own over the coming weeks.”
“The UK’s failure to test significant proportions of the population is likely making the decisions about how to unwind the lockdowns more difficult, while the high number of Covid-19 deaths in the UK is also a horrifying constraint.”
“On top of this year’s deep recession, the fear of a return to WTO rules on trade from January 2021 and the risk of confusion and delays at UK borders is a concern for investors. Consequently, we still see GBP as being vulnerable in the coming months.”
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