Goldman Sachs strategist lowers expectations for the pound against the euro due to the UK policy mix not being favorable for the pound.

Goldman Sachs strategist Stuart Jenkins wrote that the combination of fiscal austerity and loose monetary policy in the UK will have a negative impact on the pound, especially relative to other European currencies. The bank's current target exchange rates are: 0.89 for the euro/pound in three months, 0.90 in six months, and 0.92 in a year. This is slightly higher than the forecast in August. Jenkins said, "We expect the fiscal constraints in the UK to remain the main challenge for the pound, especially compared to European currencies in the G-10." The "increasing risks" in the UK labor market will pose a downward risk to interest rates.