Nomura: The Euro will Rise Steadily towards 0.88 against the GBP by the End of This Year

Economists at Nomura expect markets to have shifted away from carry-based trades and are now more focused on growth expectations, suggesting stronger sterling; recent global surveys have disappointed, causing high-beta currencies to underperform .
In addition, the market now expects the Bank of England to raise interest rates by a total of 121 basis points by the end of the year, in sharp contrast to Nomura’s forecast of 75 basis points.
Leading indicators from Nomura suggest UK CPI may surprise to the downside in the second half of the year.
Taking into account the possibility that the market is overpricing interest rate hikes and the UK’s CPI unexpectedly falls, EUR/GBP will rise steadily towards 0.88 by the end of this year, and may even move towards 0.90.