EUR/GBP is likely to stabilize somewhat this week following last week's sharp depreciation. With little data of interest, the main focus will be the release of the preliminary Q3 GDP.
"A 0.5% q/q growth rate is expected, down from 0.7% q/q in Q2 and below consensus expectations of 0.6% q/q growth rate. If the forecast materializes, the carryover on 2015 growth would be 2.3pp", says Barclays.
UK economic growth remains relatively robust, but fiscal consolidation will likely weigh on UK activity in an environment of surprisingly low inflation and the underpriced impending EU referendum.
"GBP/USD is likely to resume lower on the expected GDP miss. Over the medium term, GBP is likely to outperform the EUR due to a significant growth differential but domestic headwinds should push cable lower over the coming year", added Barclays.
