Rabobank forecasts EUR/GBP at 0.87 in three months amid UK political risks and steady Bank of England rates.
The British Pound (GBP) may see increased volatility due to Prime Minister Burnham’s welfare reform plans and internal Labour Party tensions. Rabobank’s analysis suggests fiscal restraint has temporarily supported gilts and GBP, but political friction could undermine stability in the coming months.
UK inflation remains soft, though rising oil prices add uncertainty. The Bank of England (BoE) is expected to maintain steady policy, with EUR/GBP projected to rise toward 0.87 over three months. Markets are cautiously optimistic but wary of potential intra-party disputes.
If Burnham delivers fiscal prudence without alienating Labour MPs, GBP could strengthen. However, failure to manage internal divisions may trigger further market turbulence, particularly into autumn.