GBP/USD Post-Brexit Target Forecast @ 1.30: Credit Agricole
- Written by: Gary Howes
Content provided by eFXnews
The pound / dollar exchange rate has tested 31 year lows at 1.31 but has since bounced to 1.33. However, we should expect a gradual move towards 1.30 say Credit Agricole who write:
With the UK voting in favour of leaving the European Union, the GBP’s outlook appears to be subject to heightened uncertainty.
We stressed previously that in the unexpected case of a Brexit, majors such as GBP/USD should approach levels closer to 1.30 and EUR/GBP around 0.85.
It must be noted that the most recent development is keeping both the UK’s inflation and growth outlook subject to heightened uncertainty.
This is, for instance, well reflected in UK credit default swaps hitting yearly highs. At the same time uncertainty remains intact given Cameron’s resignation.
Looking ahead, it cannot be excluded that the BoE will have to act anew in order to prevent conditions from destabilising further.
All of the above suggests that the GBP will remain subject to downside risks.
Given the latest development it appears unlikely that data will have any major data impact. The main focus will be on official speakers.