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Forex pairs in this Article » EUR/GBP, GBP/USD (Barcelona) - Jane Foley, Senior FX Strategist at Rabobank believes that for some time, when viewed in isolation, the UK's economic fundamentals are poor.

However, she notes that the pound has outperformed the EUR and the USD this year. In recent weeks the macro economic environment in the UK has deteriorated and the BoE has suggested the Q4 GDP could contract on a QoQ basis and inflation is again proving to be stubbornly high. Also the poor performance of public finances has led to speculation that the UK is on course to loose its triple A credit rating in the months ahead.

Foley writes, " In our view the BoE is likely to resort to more QE potentially in February in an effort to steer the economy away from the risks of a triple-dip recession as the effects of continued falls in real wages, soft exports and the step up in austerity bites in 2013. While sterling may still win a little ground vs. the EUR on bouts of tension in the Eurozone, on balance we expect EURGBP to edge slightly higher to 0.83 by the end of 2013. Cable, however, is likely to hold its ground due to our forecasts of a weak USD. We expect GBPUSD to end the year around 1.63."
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