Pound to Dollar Exchange Rate Forecast Post-Brexit

[thenews]

The pound sterling crashed to a 30 year low following the shock news that the UK had voted to exit the European Union. We hear from two Swiss banks as to where they see GBP/USD settling.

The vote was a massive shock to traders who had only 24 hours previously been pushing the exchange rate to a fresh 2016 best.

Sterling fell off its perch when the results from Sunderland were released - it was shown that the Remain vote was not enjoying the support it needed to secure victory.

The GBP crashed through the night and hit a low of 1.3228.

While it has recaptured some lost ground, the outlook is decidedly negative with technical  forecasting being thrown out the window.

This is a currency that will not respect barriers drawn on charts.

So where will GBP/USD go from here?

We have heard from UBS that coming days will see the GBP complex fraught with volatility.

"We expect to see significant volatility in currencies and equities until a greater understanding of the consequences of the UK's decision is gained," say UBS in a note to clients.

UBS say it is reasonable to expect that sterling will settle in the mid 1.30s level against the US dollar until some clarity emerges.

"Beyond this level, we would note that sterling would be significantly undervalued and markets would probably be reluctant to sell," say UBS.

Analysts at Credit Suisse meanwhile see a deeper decline.

In their first post-brexit research note analysts say:

"The dollar rally is likely to continue, with cable moving into the 120s, while dollar Yen could settle below 100. The only note of caution is the possibility of central bank intervention – possibly in a coordinated fashion."