As a result of this recent weakness, the Pound has lost its crown as the best performing G10 currency in the year to date. Economists at Rabobank analyze GBP outlook.

EUR/GBP to move lower within its range on a three-month view

While we expect US growth to slow to a technical recession in the early part of 2024, the current resilience of the US economy and fears that the Fed may still hike rates further suggests that Cable is likely to stay on the back foot. We see risks of a dip to GBP/USD 1.19 on a three-month view.

While we see scope for USD strength to push Cable lower on a three-month view, we continue to see the risks facing the EUR and GBP as better balanced. EUR/GBP failed to push above the top of its range last week with the 200-DMA in the 0.8708 area remaining intact. We continue to favour selling rallies to this level and see scope for EUR/GBP to move lower within its range on a three-month view given the growth clouds gathering over Germany.