Goldman Sachs says Pound-to-Euro "Underperformance Intact" - Pound Sterling Live

What the desk is arguing

Goldman Sachs argues that pound-to-euro underperformance remains intact, suggesting continued weakness in GBP relative to EUR. The firm likely points to divergent monetary policy expectations, with the Bank of England seen as more dovish than the ECB.

Supporting this thesis, Goldman may cite UK economic headwinds such as sticky inflation and sluggish growth, while the euro area benefits from fiscal stimulus and tighter labour markets. The desk implicitly rejects the view that GBP has bottomed or that EUR upside is limited.

Where it sits in our coverage

Our consensus target for EUR/GBP is 0.8550 (GBP/EUR: 1.1696), with a firm spread of 0.8250-0.8850 (GBP/EUR: 1.1299-1.2121). This view aligns broadly with Goldman's bearish GBP stance, though our range allows for some GBP recovery. We expect the pound to remain under pressure but see limited downside from current levels.

Other firms have mixed views. - Barclays targets EUR/GBP at 0.85 (GBP/EUR: 1.1765) for Dec-26, aligning with bearish GBP. - JPMorgan has a EUR/GBP target of 0.86 (GBP/EUR: 1.1628) for Dec-26, also bearish but slightly less so. - BofA disagrees, forecasting EUR/GBP at 0.82 (GBP/EUR: 1.2195) for Dec-26, implying GBP strength.

How other firms see it

Other major banks are split on GBP/EUR. Barclays and JPMorgan align with Goldman's bearish GBP view, expecting the euro to outperform. In contrast, BofA holds a contrary stance, forecasting GBP appreciation against the euro.

Barclays and JPMorgan share Goldman's scepticism on GBP. Meanwhile, BofA is the notable outlier, citing UK macroeconomic resilience and potential BoE hawkish surprises as reasons for GBP upside.