Analysts cite weak UK fundamentals and fiscal risks for expected GBP decline, targeting EUR/GBP at 0.88 by year-end.
ING analysts predict the British pound will surrender recent gains as UK short-dated rates drift lower and fiscal risks resurface ahead of autumn. The bank expects EUR/GBP to climb toward 0.88 by year-end and 0.90 in 2027, while GBP/USD remains rangebound between 1.32 and 1.36.
Sterling’s summer rally was fueled by positioning, carry trades, and potential M&A flows rather than lasting economic improvements. UK fundamentals remain fragile, with fiscal concerns likely to re-emerge as borrowing pressures mount beyond current budget plans.
The Fed’s expected policy stance and a softer USD are seen capping GBP/USD upside, reinforcing the forecast for limited sterling strength in the near term.