GBP Sees Surge but Expected Range Trading Ahead

Rabobank's Senior FX Strategist Jane Foley has given an update on the British Pound's (GBP) recent performance. The GBP is currently the top G10 currency on a one-day view but only middling over longer horizons, according to Foley.

The pound's resilience and fiscal constraints are key factors in its performance, Foley notes. Recent UK economic data has been better than expected, making the UK economy resilient along with that of the Eurozone through Q2 and into the summer.

Foley expects EUR/GBP to trade within a range over the coming weeks, with a mild upside bias later in the year as fiscal realism weighs and BoE rate hike risk is further priced out. The market still sees some risk of higher rates this year, which could undermine the pound if steady policy continues.