EUR/GBP to Remain Range-Bound, UBS Forecasts

UBS Forecasts EUR/GBP Stability

A new report from UBS indicates the euro-to-pound exchange rate will likely remain within its current trading range. The analysis suggests this stability comes as the budget-related risk premium has been priced out of the British pound.

Market Overview

Upbeat economic data from the United Kingdom has provided additional support for sterling in recent weeks. Meanwhile, the euro has had a minimal impact on the EUR/GBP pair, with the European Central Bank maintaining its policy stance and Eurozone economic data described as uneventful.

Economic and Market Impact

UBS forecasts the EUR/GBP exchange rate will stay within the 0.86-0.89 range, expecting a gradual move toward the upper end of this band by the end of 2026. Given that the yield differential currently favors the British pound, UBS anticipates similar total returns for both currencies despite the expected gradual shift.

Summary

The EUR/GBP pair is expected to show limited volatility, supported by a resilient pound and a neutral euro. Future movements will depend on significant changes in UK economic data or ECB policy direction.

FAQ

Q: What is UBS's forecast for the EUR/GBP exchange rate?
A: UBS forecasts the rate will stay within the 0.86-0.89 range, gradually moving toward the upper end by late 2026.

Q: What factors are supporting the British pound?
A: The pound is supported by the fading of budget-related risks and positive economic data from the UK.

Source: Investing.com