ING Research discusses EUR/GBP outlook and sees a scope for a gradual upside through 0.92 in 1-3 months.
"GBP performed well in July. The EUR trade-weighted index rallied 3-4% after the EU Recovery Fund was agreed – but GBP matched those gains. Driving that move was probably a market underweight GBP, but also the UK economy opening up. In fact the BoE now states the economy recovered more quickly than expected," ING notes.
"Importantly the BoE assumes that the UK secures a comprehensive free trade deal ahead of year-end. We concur, although expect tense discussions to weigh on GBP into October.
We note that the global investor community remains very underweight UK equities. Yet we struggle to see the case for rerating the UK and instead see EUR/GBP heading to 0.92," ING adds.