The single European currency is set to strengthen. According to UBS analysts, the EUR/GBP pair has recently edged up. This rise comes after a brief lull that followed the initial turmoil triggered by the hefty tariffs introduced by US President Donald Trump.
UBS experts believe the euro’s strength drives the recent movement in the EUR/GBP pair. However, analysts expect the pair to remain within its current range over the coming months due to similar economic conditions in both regions.
Preliminary estimates suggest that both the eurozone and the UK stand to benefit from international investors' growing desire to diversify away from the US dollar. The bank forecasts that over time, the euro will strengthen against the British pound. Analysts see a potential target level of 0.86 for the EUR/GBP pair.
UBS is confident that the geopolitical and trade risks affecting both currencies will "ultimately be overcome." This will support the euro’s gradual appreciation against the pound, analysts conclude.
