GBP Faces Autumn Pressure as Market Overprices BoE Hikes

Rabobank's Senior FX Strategist Jane Foley warns of impending pressure on the British Pound (GBP) against the Euro (EUR) as autumn approaches. This comes on the back of reduced expectations for Bank of England (BoE) interest rate hikes and ongoing political developments under UK Prime Minister Burnham.

Foley points out that despite a brief sterling rally in June, the EUR/GBP currency pair has been trading sideways since July. With the UK parliament in recess until September, newsflow is expected to be limited.

However, some budget-related information has leaked out, which could put further downward pressure on GBP as the summer winds down. Rabobank's research suggests that markets are overestimating the likelihood of BoE rate hikes this year.

The strategist recommends buying EUR/GBP on dips to target higher levels, potentially breaking above the recent high of 0.8588.