Deutsche Bank sees room for further EUR/GBP rally

Deutsche Bank sees further upside for EUR/GBP after the British pound suffered a sharp selloff on Thursday evening, driven by a surge in political risk premiums following news that Greater Manchester Mayor Andy Burnham could contest a parliamentary seat and mount a future bid for Prime Minister.

The selloff broke a period of relative calm for sterling, coming directly after the UK local elections, which analysts said would leave political uncertainty lingering or even deepening over the summer. In a research report published on May 14, 2026, Deutsche Bank noted that the currency's reaction was unusually sharp, reflecting heightened sensitivity to domestic political headlines. The bank's analysts see room for a further rally in EUR/GBP as the political backdrop continues to weigh on the pound.

For foreign exchange and currency traders, the move highlights how political risk premiums can quickly re-emerge in sterling, affecting rate differentials and carry trade dynamics. The euro, by contrast, benefits from a relatively stable political environment in the eurozone, widening the gap in perceived risk. Traders can monitor the evolving EUR/GBP price action on NowPrice's real-time forex dashboard to track the impact of political developments on the cross rate.

Looking ahead, the focus will be on any further political developments in the UK, including potential by-elections and leadership challenges. The upcoming summer months could see increased volatility for sterling as the political narrative unfolds. Deutsche Bank's view suggests that any dips in EUR/GBP may be seen as buying opportunities, but traders should remain alert to shifts in sentiment driven by political headlines.