Goldman Sachs has updated its forecasts for the EUR/GBP currency pair following the Bank of England's (BoE) decision, signaling a revision down in the terminal rate forecast and recognizing further downside risk to the policy outlook.

Revised Forecasts

Goldman's revised forecasts for the EUR/GBP are as follows:

• 3 months: 0.86 (previously 0.85)
• 6 months: 0.85 (previously 0.84)
• 12 months: 0.84 (previously 0.84)

Context of the Revision

The economists at Goldman have adjusted their forecasts in light of recent developments, including the latest decision by the BoE. They see a less urgent approach than what was previously implied, which has led to the downward revision in their forecasts.

Still Bullish on Sterling

Despite the revision, Goldman maintains a bullish stance on the British pound (Sterling), believing that there will be more developments to come in the market dynamics.

Key Points:

• Downward Revision: Goldman's latest forecast revises the EUR/GBP rates downward over 3 and 6 months, reflecting changes in the policy outlook and the latest BoE decision.
• Sterling Bulls: Goldman continues to hold a bullish view on Sterling, expecting more rounds in the market movement.
• Less Urgency from BoE: The BoE's recent decision has demonstrated less urgency than was implied earlier, influencing Goldman's revision.

Conclusion:

Goldman Sachs' latest revision to the EUR/GBP forecasts illustrates a nuanced understanding of the current policy and economic environment. The reduction in the short-term outlook for the EUR/GBP rate reflects the perceived downside risks and a change in the urgency level demonstrated by the BoE. Still, Goldman's bullish stance on Sterling signifies an ongoing belief in the currency's potential strength, underscoring the complexity of the current market scenario. Investors and market participants will likely find these insights valuable in navigating the shifting landscape of the currency markets.