Nordea Research discusses EUR/GBP outlook and targets the cross at 0.81 by year-end.
"Aggressive tightening by other central banks is adding to the rate hike expectations in the UK. RBNZ and BoC moved by 50bp last week and signals from several Fed members have supported the view that the Fed will move by 50bp at the next FOMC meeting on 4 May. Hence, it has become more likely that the BoE might not pause but move again already at the next rate meeting in May and if not, the next the rate hike from the BoE will be delivered during the summer. The outlook for sterling has improved in recent weeks and EUR/GBP has moved back down to 0.83 after a short spell up at 0.85 back in late March," Nordea notes.
"We expect the BoE to move its key rate to 1.75% by the end of the year (currently at 0.75%) and that should support the sterling going forward. We expect EUR/GBP at 0.81 at end the year – a level not seen since before the Brexit vote in June 2016," Nordea adds.