Despite the economic crisis that the UK economy has been experiencing, the EUR/GBP remains one of the most popular currency pairs in the world. It is traded by investors, as a way to diversify their portfolios. It is also used in carry trades, where the trader sells one currency to buy another. The EUR/GBP is a moderately bullish currency pair. It is expected to strengthen to 0.87 in the second quarter of 2023, according to analysts at Monex. However, the currency pair is expected to drop to 0.8580 in six months, according to ING analysts. The European Union is the UK’s largest trading partner. The EU will continue to leverage its economic power to shape global norms. It is expected to move toward strategic autonomy in 2021.
The eur gbp forecast trading is influenced by the policies of the European Central Bank and the Bank of England. It is also influenced by GDP growth, inflation, consumer confidence, and trade balances. The currency pair is expected to continue to be volatile. However, it is expected to remain within the 1.10 to 1.12 range for the remainder of the year. The new government, led by Prime Minister Liz Truss, has plans to borrow and spend heavily. However, the long-term impact of this strategy on the UK economy is uncertain. The EUR/GBP will continue to be a noisy pair. It will be highly influenced by the monetary policy stance of both the Bank of England and the European Central Bank. It will also be affected by the economy of both countries.
Earlier this month, the Bank of England announced that it would raise interest rates by 25 basis points. This announcement triggered a strong Pound, which reached a multi-month high last week. This week’s key economic data releases will also impact the Pound to Dollar exchange rate. UK inflation data is due to be released on Wednesday. This data could encourage the BoE to raise interest rates further. If inflation data is stronger than expected, the USD could see a boost. The Bank of England’s fiscal policy will also be a factor in GBP/USD. According to the Financial Times, the Autumn budget will include a raft of tax rises and spending cuts worth GBP50bn. This will leave a deficit of around GBP35bn.
The next meeting of the Bank of England will take place on November 3. The BoE has indicated that it is prepared to adjust interest rates if inflation increases. This may encourage the Pound to Dollar exchange rate to regain momentum and cement the 1.10 level. However, the recovery could be short-lived. If inflation data pound to dollar forecast is stronger than expected, or if the Fed is hawkish, the Pound to Dollar exchange rate could unravel. The Pound to Dollar exchange rate has recovered from losses in late September. It could look to cement the 1.10 level this week, but may lose momentum if interest rate decisions become uncertain. The USD is supported by hawkish bets from the Fed and safe haven flows. The Pound is also supported by high inflation in the UK, which may encourage the BoE to raise interest rates.