BofA Makes Contrarian Call for Pound Sterling to Rise Against the Euro in 2026 - Pound Sterling Live
Bank of America (BofA) has made a contrarian forecast, predicting a rise for the Pound Sterling against the Euro by 2026. This outlook runs counter to prevailing market sentiment that generally favors the Euro amid ongoing concerns regarding the UK's economic resilience post-Brexit.
What the desk is arguing
BofA's call suggests that the Pound will strengthen against the Euro, a position that challenges the predominant view in the market. Their analysis likely hinges on factors such as expected improvements in the UK's economic landscape and potential policy shifts that could enhance the Pound's standing relative to the Euro.
The bank's forecast appears to reject assumptions that the Eurozone will consistently outperform the UK, particularly if external pressures, such as inflation and geopolitical tensions, impact both economies differently over the forecast period. This could reopen avenues for Sterling appreciation if the anticipated dynamics unfold as BofA predicts.
Where it sits in our coverage
In our own assessments, we maintain a consensus target for GBP/EUR at 1.075, which reflects a cautious stance amid ongoing volatility in both regions. While BofA's view is optimistic, it diverges from our position as we foresee a tighter range for the currency pair in the near term, within a spread of 1.04 to 1.12.
Specifically, our per-firm coverage shows varied expectations:
- JPMorgan: targets 1.10 for Mar-26,
- Barclays: anticipates a conservative outlook, forecasting 1.05,
- Goldman Sachs: sets their target at 1.06.
How other firms see it
Several firms remain skeptical of BofA's upbeat forecast for the Pound, with Barclays and Goldman Sachs leaning toward a more bearish outlook. They emphasize the structural challenges facing the UK economy as a reason for maintaining lower targets.
- Barclays: 1.05
- Goldman Sachs: 1.06
- JPMorgan: 1.10 (aligned with some optimism but cautious overall)
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01BofA predicts the Pound will rise against the Euro by 2026.
- 02Current market sentiment generally favors the Euro due to UK economic concerns.
- 03The forecast contrasts with a mixed outlook from several major firms.
Market implications
If BofA's forecast materializes, we could see a reassessment of GBP/EUR positioning, creating opportunities for traders looking to capitalize on a potential rise in the Pound. Increased volatility may arise as market participants weigh the competing analyses.
Risks to this view
Key risks to BofA's outlook include persistent economic challenges in the UK, potential traumas from geopolitical developments, and the responsiveness of the Bank of England's policy to inflation pressures, which could all undermine expectations for Pound appreciation.
Sources & References
How we cover this story