UK Economy Growth Won't Boost Sterling: Rabobank

The UK's economy is set to release its second-quarter GDP figures on Thursday, but despite expectations of growth, Rabobank doesn't think it will be enough to boost the British Pound. The bank expects a decent headline number, around 0.4% consensus, but believes momentum may have faded as the quarter progressed.

Rabobank thinks that even a strong GDP release might not favor the pound, citing the Bank of England's likely decision to keep interest rates on hold through the end of the year. The bank also notes that higher oil prices could lead to tougher talk against inflation from the BoE, but this wouldn't necessarily be positive for Sterling.

The bank is also wary of uncertainty surrounding the upcoming autumn Budget, which could keep the UK market nervous into the fall. As a result, Rabobank recommends buying EUR/GBP on dips back to 0.85 and selling GBP rallies if the UK GDP prints a strong figure tomorrow.