Measured against the EUR, the Pound has inched higher to levels last seen in December last year. Economists at Rabobank have revised their GBP forecast modestly higher.
GBP could begin to falter despite the higher rate environment
If the market begins to assess that the Bank may need to push the economy into recession to bring CPI inflation back to 2%, the GBP may begin to decline despite the high rate environment.
We have revised our one-month EUR/GBP forecast to 0.86 from 0.87. However, we still see risk of EUR/GBP 0.90 on a 12-month view.
