EUR/GBP: “In our latest monthly FX Outlook report, we projected that EUR/GBP would fall to 0.7500 by the end of Q1 2015 supported by the assumption that the BoE would begin to raise rates in February 2015. With it appearing more likely now that the BoE will begin to raise rates in November 2014, it should encourage a stronger pound than we had expected in the second half of this year. As a result, EUR/GBP may fall towards the 0.7500-level by year end rather than by the end of Q1 2015,” BTMU projects.
GBP/USD: “In contrast, the ECB may still announce further monetary easing later this year or early next year if inflation continues to disappoint. The stronger pound outlook should also push GBP/USD above the 1.7000-level heading into year end, although the scope for further pound upside against the US dollar should prove more modest than against the euro. The Fed may also follow the BoE and surprise the market by signalling that rate hikes will begin earlier than from the middle of 2015 helping to strengthen the US dollar and dampening further upside for GBP/USD,” BTMU adds.