Pound Sterling Rally Against Euro Has Space to Run: Barclays - Pound Sterling Live

What the desk is arguing

Barclays is asserting that the rally of the Pound Sterling against the Euro is not only justified but has room to expand. The firm points to a combination of improving economic indicators in the UK and ongoing challenges within the Eurozone that could bolster the Pound's position in the currency pair.

Supporting this thesis, Barclays highlights that the UK economy is demonstrating resilience despite various challenges. Furthermore, they suggest that factors such as potential shifts in monetary policy and economic recovery prospects favor a stronger Pound. Acknowledging the risks associated with this outlook, it seems Barclays is dismissing a scenario where the Euro might outpace the Pound due to its own economic recovery efforts.

Where it sits in our coverage

Our consensus target for GBP/EUR is 1.075 with a firm spread of 1.05 to 1.12, aligning closely with Barclays' positive stance on the Pound's potential trajectory. This suggests that we view the Pound as having room for further gains in a market that is currently favoring it over the Euro.

The following firms provide related insights that are consistent with this outlook, reinforcing the belief in the Pound’s upward movement:

• Barclays: target 1.08
• JPMorgan: target 1.10
• Deutsche Bank: target 1.06

How other firms see it

While Barclays and a few other firms hold a bullish view of the Pound against the Euro, there are differing opinions in the market. BofA presents a contrary stance, arguing for a target of 1.04 due to ongoing economic headwinds in the UK that could counterbalance the potential upsides.