EUR/GBP to trend slightly lower over 2022 – Rabobank

EUR/GBP has dived to the lowest level since February 2020. The ability of the UK economy to post upbeat data releases will be key to reinforce a hawkish Bank of England and underpin the pound, economists at Rabobank report.

Year-end EUR/GBP target stands at 0.85

“Given that policy tightening is well anticipated by the market, we expect that a December rate hike is only likely to lead to sustainable gains for the pound if it is backed by further strong UK data releases. The better data will likely be needed to erode scepticism over whether the Bank could be making a policy mistake.” 

“Our year-end EUR/GBP target stands at 0.85.”

“We are expecting GBP to appreciate modestly vs the EUR in 2022 given continued dovish tone of the ECB. Other risks for the EUR stems from the fourth wave of covid that is currently crossing the continent and potentially the French presidential election in the spring.”