EUR/GBP to Rebound to 0.87 as Sterling Fades

Rabobank's analysts predict that the EUR/GBP exchange rate will recover to around 0.87 over the next three months, as steady Bank of England policy and renewed UK political friction weigh on Sterling.

The current EUR/GBP rate is trading near 0.8555, although it remains around 0.7% lower for the month. The pair has recovered from its July low but is still below its February peak of 0.8790, reflecting Sterling's strong first-half performance against the Euro.

Rabobank expects that trend to partially reverse due to the potential for disappointment over a lack of rate rises from the Bank this year, particularly as soft activity data and uncertainty surrounding the autumn budget constrain the policy outlook.