Boa Gbpeur To Reach Higher

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Boa Gbpeur To Reach Higher

Boa: Gbp/Eur To Reach 1.25 By 2026

Bank of America (BoA) has issued a new forecast for the GBP/EUR pair. According to them, it is normal for GBP/EUR to struggle during the first few months of the year.

So, it is no surprise that GBP/EUR is struggling at the start of the year 2025. Right now, the GBP/EUR is seen trading at monthly lows.

Gbp/Eur To Switch Directions Soon

However, Bank of America believes that the bearish cycle in the GBP/EUR is overdone. That's why they have issued a bullish forecast for the GBP/EUR. According to them, GBP/EUR will move higher to around 1.25 by the end of 2025.

BoA also added that the recent sell-off in the GBP/EUR is totally unjustified and probably overdone. They commented on how the decline was not caused by any trigger.

Bank of America also added that the higher bond yields have led to an increase in the budget fears. However, the risk premium of the Pound will decline in the coming months.

The BoA is of the view that the Bank of England (BoE) will move to lower the rates at a sharp pace. On the other hand, the ECB will adopt an even more aggressive approach to cutting rates.

So while the rates will lower in the UK, the Pound will still have a yield advantage as the ECB's pace will be way higher! The bank also added that the UK economic conditions will improve, leading to more growth.

Once the rates are lowered by the BoE, the economy will take off and is highly likely to register strong growth.

The stronger growth in the UK economy will also minimize the stagflation fears. Meanwhile, the growth in tax revenue will also help with the UK's budget.

The overall picture favors the GBP against the EUR based on the rate difference and the economic situation. However, that could change if the interest rate in the UK drops below the rates in the EU region.

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