GBP/USD forecast - page 42
You are missing trading opportunities:
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
Registration
Log in
You agree to website policy and terms of use
If you do not have an account, please register
Pound Sterling to Avoid a 10% Hit Against the Euro and Dollar say Credit Suisse
Pound Sterling was forecast to take another 10% slump on hard-Brexit manifesting itself according to Credit Suisse in their projections released at the start of 2017.
And a hard-Brexit - exiting the single market - is exactly what has been presented by the UK Government who on Tuesday 18 January laid their negotiating position on the table.
But - that call for a 10% depreciation on such an outcome is now unlikely say Credit Suisse.
Why?
When Hard-Brexit isn't Quite Hard-Brexit
Credit Suisse came into 2017 forecasting the Pound to Dollar exchange rate at 1.20 in 3m and 12m, and the Euro to Pound Sterling exchange rate 0.858 and 0.83, respectively.
From a GBP into EUR perspective this equates to 1.1655 and 1.2048.
“Our view was that in a full hard Brexit scenario GBP can trade about 10% weaker, while on a softer outcome it had room to rally by about that much,” says Shahab Jalinoos at Credit Suisse.
The forecast targets were to stick until such a time as the market got much greater clarity on end outcomes, something Credit Suisse did not anticipate in the next 12 months.
The interesting thing about Theresa May's Brexit speech is that the “comments do not leave us much wiser,” says Jalinoos.
Yet, some important clarity has been provided nevertheless.
As such that expected 10% decline that hard-Brexit requires has been negated.
The following factors have mitigated against another notable slip in the Pound:
read more
Credit Suisse: Sell Pound Sterling To Dollar Exchange Rate 'on Rallies' On Rising UK Inflation
The President-elect Donald Trump does not agree with the dollar’s strength.
He said: “Our currency is too strong. And it's killing us.” Trump’s transition team member Scaramucci also said: “We have to be careful about the rising currency.” Both these developments over the weekend have led Credit Suisse to revise a few of their previous forecasts for this year.
We summarise the key takeaways from the Credit Suisee 2017 FX report:
Trump not overly supportive of the border-adjusted taxation
“Trump was lukewarm at best about the idea of border-adjusted taxation, calling it too complicated.”
This is a significant development as this was “a key part of the revenue loss offset for corporate tax cuts put forward by the Ryan plan”.
This puts the tax reforms in a jeopardy. Without tax reforms, the interest rates are unlikely to move higher quickly, which in turn will hurt the dollar’s bullish forecasts. However, this is not reason enough to go aggressively short on the dollar yet.
“We are still inclined to wait for a further USD sell-off to re-establish longs for now rather than to go aggressively short.”
source
Nordea Research Updates 3m, 6m And 12m British Pound 2017 Exchange Rate Forecasts
This week saw the British pound exchange rates experience a significant rally against the euro and particularly against the US dollar, where sterling jumped 2.5% in one day.
In her much awaited speech, Prime Minister Theresa May indicated that the UK will opt for the ‘hard Brexit’ route during negotiations.
Control of immigration and end to the jurisdiction of the European Court of Justice will take preference over gaining access to the single EU market.
Mrs. May also said that the final agreement will be put up for the lawmaker’s approval in the parliament.
Single market access unlikely for the UK companies
This complicates the accessibility to the free market, as the EU leaders have time and again said that unlimited freedom of movement for the EU citizens is a prerequisite to gain access to the single market.
“Thus the outlook for the UK economy remains clouded and it will take a long time before the road ahead becomes more certain. Britain’s exit from the EU requires not just a single deal, but several interlocking sets of negotiations,” said analysts at Nordea research.
These are:
read more
Big Jump in Pound to Dollar Rate on Monday and we Forecast the Gains to Extend
Pound Sterling has jumped against the Dollar at the start of the new week with GBP/USD being quoted at 1.2464 at the time of writing.
This comes in line with our forecasts released over the weekend (see below).
The jump is an extension of that witnessed on Friday where markets were unkind to the Dollar on the back of President Donald Trump's innaugural address to the nation.
The speech was protectionist and nationalistic in nature while being very thin on pro-USD substance, i.e details on his fiscal spending plans.
Trump’s inauguration speech was a hard hitting and protectionist, but Trump dropped some the more pro-growth ideas on infrastructure with the result that the speech, “failed to set financial markets alight,” according to analyst Kathleen Brooks, of City Index.
“The Dollar and stocks did retreat during Trump’s inaugural address,” says Brooks.
Research from Nordea Bank also suggests a strong correlation between Dollar weakness and inauguration which is likely to last until mid-March.
The empirical evidence is strong at over 90%.
It would appear that Monday has brought an extension of the USD-negative move. Expect the market to remain focussed on Trump this week.
"Markets will be on alert during the inaugural week of Trump's presidency, and high of the radar is trade policy, especially after commerce secretary Wilbur Ross underlined that the reopening of NAFTA is a top priority. A focus on rules of origin and dispute-settlement panels rather than punitive tariffs would be viewed positively, while greater detail on infrastructure spending and corporate tax reform plans would reinforce market sentiment as well," say TD Securities in a brief to clients.
Sterling-Dollar’s big surge last Tuesday, following Theresa May’s Brexit speech led to a technical breakout above the descending channel on the daily chart.
read more
Oversold British Pound Projected to Rise Against Euro + Dollar at BNP Paribas
Pound Sterling is expected to stay above its recent lows against the Euro and Dollar going forward as the currency is set to benefit from the Brexit story becoming stale.
At current levels, GBP trades well below where it should if it value were determined solely by the flow of solid economic data which confirms the economy to be in rude shape.
That Sterling is in touching-distance of multi-year lows against the majority of G10 currencies confirms that this is a political and sentiment-driven currency.
"GBP should remain supported for now. GBP has converted into a political currency, but this week could see UK politics and economics point both towards GBP strength with tomorrow’s UK Q4 GDP report suggesting strength," says Hans Redeker at Morgan Stanley in London.
Agreeing on this concept are analysts at BNP Paribas, the French investment banking giant who believe GBP is now trading near levels reflecting a worst-case scenario for trade and capital flows.
In their opinion, downside pressure should ease and further upside is now possible.
read more