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Head of globa FX at Goldman Sachs forecasts GBP/USD to 1.35 subsequent 12 months, citing correlation with equities and diminishing fears of world recession.
- GBP has a “reliably optimistic relationship with increased fairness costs”
- “Sterling’s latest rise is in fact partly concerning the broader greenback weak spot, however since early November the pound has additionally strengthened on a trade-weighted foundation as a result of it tends to do particularly properly in an setting of moderating rate of interest volatility and buoyant fairness costs.”
- “That has been the backdrop since early November and we count on extra of that within the 12 months forward. That’s the reason we expect sterling is among the currencies which have extra room to understand because the markets embrace a ‘comfortable touchdown’ view.”
- “looming elections have the potential to each incentivise further fiscal help and convey about considerably lowered commerce frictions with the EU, each of which ought to assist help home progress, assist keep away from recessionary dangers and increase the pound.”
ps. Nomura has the identical forecast, to $1.35, citing:
- softer greenback development
This text was written by Eamonn Sheridan at www.forexlive.com.
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