GBP/USD forecast - page 32
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Top 5 Pound To Dollar Rate Forecasts From Scotiabank, Lloyds, BNP Paribas, Unicredit, Credit Suisse
The GBP to USD Conversion Rate Holds Near Daily Opening Levels After US Dollar Rally Slows
The GBP/USD has concluded the week in quiet trade after sterling was left little changed by positive data releases.
We compile the best, most up-to-date FX forecasts and pound to dollar exchange rate studies from the top foreign exchange analysts.
USD Still Strong but Forecast to Gradually Ease
UniCredit's FX Strategy analysts suggest the US dollar's recent upside momentum could be slowing. Will this benefit GBP/USD?
"Reflation trades will still play a role next week, but we think the USD momentum may gradually ease."
"EUR-USD tumbled to the edge of 1.05 while USD-JPY rocketed above 113 (up over 7% since 8 November) with the yen being used as the main vehicle to express the bullish USD view after the US election."
"However, in TW terms, the USD has already slowed its appreciation pace (it was up 2.8% in the week of the US election; up 1.8% last week and flat since last Friday)."
Current Pound Sterling US Dollar (GBP USD) Exchange Rates
On Saturday the Pound to US Dollar exchange rate (GBP/USD) converts at 1.248
The us dollar conversion rate (against pound) is quoted at 0.802 GBP/USD.
The live inter-bank USD-EUR spot rate is quoted as 0.945 today.
At time of writing the us dollar to australian dollar exchange rate is quoted at 1.343.
Please note: the FX rates above, updated 26th Nov 2016, will have a commission applied by your typical high street bank. Currency brokers specialise in these type of foreign currency transactions and can save you up to 5% on international payments compared to the banks.
UK GDP Reveals Mixed Performance, Pound US Dollar (GBP USD) Exchange Rate Could Test 1.26
Scotiabank's foreign exchange strategists note that today's UK GDP revealed a mixed picture for the UK economy:
"Sterling is little changed on the day despite some positive data releases. UK GDP was unrevised in Q3, in line with market expectations."
"But details revealed that investment remains surprisingly strong (considering Brexit uncertainties) while imports weakened."
"CBI retail sales data suggested much stronger-than-expected activity in November."
So where do Scotiabank see GBP/USD in the near-term forecasts? A possible test of 1.26 before a move lower:
"Cable is trading modestly higher on the week but most of those gains were seen Monday and trading has been virtually flat around 1.2450 since."
"Short-term charts suggest a firm floor intraday at 1.2420 and pressure on daily trend resistance at 1.2435/40."
"We still see Cable consolidating ahead of another push lower (see bottom chart), rather than rebounding at this point."
"But may not preclude GBPUSD rising towards the 1.2550/1.26 area near-term before resuming its broader decline."
Pound (GBP) Forecast: Sterling Could Strengthen as Hard Brexit Priced-in
BNP Paribas are bullish on the sterling-dollar rate with the view that a "hard Brexit" has been priced in by the FX markets:
"GBPUSD remains well supported after UK Prime Minister’s Theresa May’s speech on 21 November, where she hinted at a transition Brexit deal to avoid a “cliff edge” for businesses."
"This supports our view that a hard Brexit scenario is currently priced in and that the GBP should appreciate with negotiations softening up."
"We remain positioned for more GBP upside via a 6m GBPUSD call spread."
Strong Pound Sterling (GBP) Selling Predicted Around 1.267 Say Credit Suisse
The analysts at Credit Suisee note some key levels to watch in the GBP/USD movement:
"GBPUSD continues to consolidate in a sideways range, leaving the immediate outlook unchanged."
"Downtrend and price resistance shows at 1.2511/30 where we would look for a cap."
"However, a break higher can target the falling 55-day average at 1.2569, ahead of a tougher barrier from the 61.8% retracement of September/October selloff and price resistance at 1.2674/99."
"Strong selling is expected to emerge here."
source
GBP/USD Consolidation Narrows, Breakout Imminent
GBP/USD has been consolidating within a range since the middle of the month with volatility slowing despite a broader advance in the Dollar since the US election. The pair is seen returning to support from a trendline that connects a late October spike low with lows posted on November 21 after briefly trading through resistance near the 1.2500 handle shortly after the open.
Some stops from weak short positions were likely triggered in the Asian session on a move above resistance at 1.2502. Several attempts at the level since the middle of the month have been met with sellers, indicative of the spikes above the level seen on a 4-hour chart.
A break of either the rising trendline or horizontal upside resistance would stand to carry follow through. With the momentum driven rally in the US Dollar index (DXY), a downside break in GBP/USD would carry a higher potential despite the short-term divergence.
DXY closed out the past week relatively unchanged to print a doji on the weekly chart following sharp gains in the prior two weeks. The index gapped lower at the open and sold off but a low was made in the Asian session today as support from last week’s lows held the pair higher.
There are several risk events pertaining to GBP/USD scheduled for Tuesday. Quarterly second estimate GDP figures out of the United States and the Conference Board consumer confidence numbers are likely to cause the greatest impact and will be released during the North American session.
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GBP: Can Still Out-Perform Peers: Where To Target?
The domestic factors supporting GBP’s rebound continue to play out and dominate in the shortterm, while GBP/USD weakness in the medium to longerterm has been revised to be less significant.
More importantly, because we now forecast greater independent EUR weakness as a result of political challenges ahead, that will tend help push down EUR/GBP and thereby exacerbate GBP’s TWI rebound again in the short-term. Ironically we held this view after Brexit, but it has taken the Trump win to open more minds to this strong possibility.
UK economic data has been strong. Q3 GDP ended at +0.5% q/q and retail sales data for October at a 14- year high of 7.6% y/y, shows Q4 off to a good start. We suspect foreign tourist retail receipts are helping out. At the same time with input prices rising but inflation holding back, there is clearly some wholesale/retail resistance to passing on higher import prices. How this dynamic unfolds and the extent of downward pressure on crucial consumption is the area to watch. For now, the better news has seen the trade-weighted index returned to its early October breakdown level near 77 and GBP/USD rally towards the ~1.28 reversal target (1.2674).
Our newly anticipated EUR/USD slide to 1.02 end December and 0.98 end March, while GBP/USD holds the 1.21-1.23, points to EUR/GBP down through 0.83 to 0.81 as European political developments unfold in the lead up to the French Presidential elections in the spring. A lower EUR/GBP of this order points to GBP’s TWI potentially recovering to 80, before UK domestic issues reassert.
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GBP/EUR, GBP/USD Exchange Rates In Bullish Recovery On Consumer Credit Rise
Strong consumer credit figures helped Pound Sterling exchange rates to post a bullish recovery after Monday’s slump.
The Pound was able to hold most of its gains on Tuesday afternoon after surging in the morning, and was even able to hold its ground against the US Dollar despite Wednesday’s impressive US Gross Domestic Product (GDP) results.
US growth was on track to hit an impressive 3.2% in Q3 according to the print, and US Consumer Confidence from November also surged to 107.1. The Euro, on the other hand, suffered from political jitters ahead of Sunday’s Italian referendum and Austrian presidential election re-run.
An eleven-year high in consumer credit boosted Pound Sterling to Euro and Pound Sterling to US Dollar exchange rates recently, as it suggested that the Brexit vote hasn’t had a negative impact upon the economy.
Net consumer credit grew £1.62 billion against forecasts of a £1.5 billion uptick, thanks to an upwards revision in September’s figure to £1.48 billion.
Meanwhile, mortgage approvals also greatly bettered expectations, clocking in at 67,520 rather than the 65,000 predicted.
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GBP: Sterling Is Cheap But Not Cheap Enough: Where To Target?
We have revised our year-end GBP forecast higher but maintain our fundamentally bearish view for next year, based on asymmetric growth risks, subsiding capital inflows and political uncertainty.
The solid data to date, and the expected inflation pass-through from depreciation this year, reduce the prospect of further Bank of England easing, but is unlikely to shift them to a more hawkish stance given the downside risks to growth. Our focus is on political risks related to Brexit crystallizing next year. We see the recent High Court ruling—likely to be upheld by the Supreme Court--as raising the likelihood of a general election next year. While this need not raise the odds of a “hard” Brexit, the delay to the triggering of Article 50 will prolong uncertainty and weigh on investment. We also expect continued deterioration in capital inflows to put significant pressure on the UK’s broad basic balance, while depreciation does little to boost the trade surplus.
Sterling is cheap, but not cheap enough to attract inflows amid significant growth and political risks.
DB targets GBP/USD at 1.14, 1.12, 1.09, and 1.06 by the end of Q1, Q2, Q3, and Q4 of 2017 respectively.
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Pound to Weaken Versus the Dollar Say ING Who Forecast the Pair Falling to 1.15 Again
The Pound will weaken in uncertainty in the new year, whilst the Dollar will continue its relentless rally despite efforts by the White House to talk it down, says Chief Strategist Chris Turner.
GBP/USD is likely to fall from its current highs, targeting a level just above the flash crash lows at 1.15 say analysts at ING.
Sterling’s weakness will come because of increasing uncertainty around the triggering of article 50 and the political deadlock with Brussels.
Further, the Pound is unlikely to be boosted by safety flows from Europe (unlike the last crisis) due to increasing concerns about the rise of anti-EU political sentiment there.
The Dollar will continue to rise in value on the back of higher US Treasury yields as Trump begins to deploy his ‘wish-list’ of stimulus and protectionist policies.
Based on these main themes ING’s Turner sees GBP/USD rotate back down to 1.15.
Details of Trade Recommendation
Turner recommends opening half the sell position at an entry level at 1.2820 and the other half at 1.2630.
He places a stop-loss at 1.2915 and expects a return of 9.6% down to a target at 1.1500.
Fiscal and Monetary Mix to Boost Dollar
The Dollar’s strength is expected to come on the back of tighter monetary and looser fiscal stance, similar to that adopted by Ronald Reagan in the 80’s , which led to a 30% rise in the Dollar.
“One of our main headaches, however, is making Trump’s domestic policies add up.
“For example, delivering 4% real (or did Trump mean nominal?) GDP growth should see the Fed Funds target rate being taken up to at least 2%.
“Wouldn’t a loose fiscal, tight monetary policy mix propel the dollar even higher – and further hollow out the US manufacturing sector Trump is so keen to rebuild?” Says Turner.
He further adds on the same theme:
“Republican Presidents have typically been more bearish for the dollar, although that applies more to the Bush Administrations than it does to the Reagan era of the 1980s.
“Instead Ronald Reagan triggered a boom-bust cycle, in which loose fiscal and tight monetary policy sent the dollar some 30% higher – sucking in cheap imports and destroying the current account deficit – before G5 nations agreed to devalue the dollar in 1985.
“Some are already speculating that Trump’s policies will engineer a similar cycle.”
Outlook for US Treasury Yields in 2017
A major driver for the Dollar are US Treasury yields so the outlook for these in the year ahead could also help to clarify the trajectory of the Dollar.
ING’s Turner has come up with a detailed forecast for how yields are expected to move in 2017 (see chart below).
In the first quarter, he sees a pop higher likely after the delivery of the President’s Budget as hopes of Trump's stimulus and protectionist ‘wish-list’ are revived.
In Q2 he sees yields pull-back however because of a reality check in the form of resistance from Congress preventing some of his policies from getting through.
In Q3 yields will rise due to flows from Europe as it struggles due to rising political uncertainty.
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