There is scope for the pound to rise against the euro – CE

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The pound has strengthened against the dollar since the beginning of April but has been a bit more stable against the euro. In the view of economists at Capital Economics, there is more scope for sterling to rise against the euro than the dollar.

There probably isn’t much scope for sterling to strengthen further against the dollar

“After appreciating sharply against the dollar in the past two weeks, we doubt there is much scope for sterling to rise much further against the dollar given the dollar is already in line with our forecast for relative yields in the US and UK. But the more positive economic outlook this year for the UK compared to the eurozone means that it could rise against the euro.”

“The rapid vaccine rollout in the UK and the lifting of restrictions, in contrast with the euro-zone where the rollout has been much slower and restrictions are being extended, may help to boost the pound to €1.22 by the end of 2021. But as the economic recovery in the eurozone eventually catches up, that may contribute to a fall in sterling against the euro to €1.17 by the end of 2023.”

 

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