The Euro is expected to be the currency to beat through the remainder of 2016 and 2017 with JP Morgan anticipating the currency to strengthen against both the Pound and US Dollar.
Latest research from J.P Morgan shows that the 1.30-1.33 zone looks to be the new long-term target for the GBP/USD exchange rate.
Meanwhile, forecasts show that the GBP/EUR exchange rate will continue to bleed into 2017 with an eventual end-of-year target residing at 1.11.
For reference, at the time of publication, the Pound to Euro exchange rate traded at 1.1656, the Pound to Dollar exchange rate traded at 1.2988, the Euro to Dollar exchange rate traded at 1.1143.
Commenting on GBP’s outlook JP Morgan say:
“We remain bearish GBP medium-term as there’s nothing in the positive data flow through July and August to cause one to change one’s mind about the longer-term economic damage from Brexit, nor the consequences of this for the ability of the UK to finance its current account deficit (the BoE this week signalled that it is looking through the recent data).”
The Euro is clearly biased higher if against its major competitors with EUR/USD heading back to 1.20 by the time 2017 is through.
Part of the reason for this is JP Morgan see the European Central Bank as having a waning ability to trigger material downside in the Euro.
The ECB and Bank of Japan are both believed to have run short on the ability to prompt a materially weaker exchange rate.
For the full list of exchange rate forecasts, please see below: