Pound Sterling / US Dollar Forecasts Upgraded at UBS; GBP Predicted to Remain Dominant in Remainder of 2013
A look at the currency markets on Monday morning show GBP continues to enjoy an advantage over the US dollar:
The Pound Sterling to US Dollar exchange rate is 0.17 pct higher on a day-to-day basis. GBP/USD is currently quoted at 1.6032.
The US Dollar to Pound exchange rate is at 0.6237.
Be aware that the above are spot market inter-bank currency rates. Your bank will charge a spread when transferring your money. However, an independent FX provider will guarantee to undercut your bank's offer, thus delivering you up to 5% more currency. Please learn more here.
UBS raise their forecasts for Sterling vs US Dollar
Gareth Berry at UBS says his bank is predicting the US dollar to stay under pressure for the remainder of 2013. This contrasts to the view held at UniCredit Bank where there are suggestions that investors should short sterling.
Commenting on the raised forecast for GBP/USD Berry says:
"All things considered, we expect last week’s FOMC meeting will keep the dollar weak for one quarter before its longer-term uptrend can resume. So we revised our short term forecasts across the board overnight.
"Our 1m and 3m GBPUSD forecasts rise to 1.63 and 1.61 respectively (from 1.55 and 1.52 previously)."
US dollar forecasted lower across the board
Berry is also predicting the US dollar to under-perform elsewhere:
"We raised our 1m and 3m EURUSD forecasts to 1.37 and 1.35 respectively (from 1.30 and 1.28 before).
"Similarly, we now project USDJPY to be at 101 in one month's time and 103 over the next three months (compared with prior targets of 102 and 105). We expect USDCHF to be 0.91 and 0.94 over one and three months compared to 0.96 and 0.99. We raise our 1m and 3m AUDUSD forecasts to 0.95 and 0.93 (from 0.88 and 0.88 respectively).
"Similarly, we expect NZDUSD to trade at 0.84 and 0.83 over the next one to three months (compared to 0.78 and 0.79 previously) and USDCAD to fall to parity over the next one to three months."
US dollar afforded relief by Bullard
The US dollar tanked last Thursday when the FOMC said there would be no tapering to the asset purchase programme anytime soon.
However, comments by St. Louis Fed President Bullard on Friday prevented any further dollar weakness overnight.
Bullard said that opting not to taper last week was “a close call…it wouldn’t take much to tip things toward a small tapering”.
He pointed to the Oct 30-31 FOMC as a “live” meeting saying “it’s possible you could get some data that change the complexion of the outlook and could make the committee comfortable with a small taper in October”, although he qualified all that noting “I’m not saying it’s going to happen”.