As a result of the UK’s Brexit referendum in June 2016, the trading range for EUR/GBP swiftly adjusted from trading mostly below the 0.80 level in H1 that year to an average of around 0.8590 in H2 2016, Rabobank’s FX analyst Jane Foley notes.
EUR/GBP seems to be eyeing the downside
“Since July 2016 the average trading level for EUR/GBP has been 0.8690. However, having started 2023 close to that average level, the currency pair has subsequently been on a slow grind lower. Last month EUR/GBP dipped close to the 0.8260 level and is currently trading only modestly above this low.”
“This raises the question as to whether GBP can achieve pre-Brexit referendum levels vs. the EUR in the foreseeable future. Our 12-month forecast for EUR/GBP is 0.8150. This falls short of a move back to pre-referendum levels. That said, it would take the currency pair below the 2022 low to levels last seen In June 2016, just after the referendum result was published.”
“In our view, downside risk to this forecast is more likely to come from a weaker than expected EUR rather than a more emboldened pound.”
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