Lloyds Release Latest Forecasts for Pound Against Euro and US Dollar
Analysts at Lloyds Banking Group have released their latest forecasts for the British pound against the euro and US dollar.
After what has proven to be a strong start for the UK's sterling exchange rate omplex we ask what the future holds.
One of the UK's leading financial institutions, Lloyds Banking Group, have released their latest calls on the outlook facing the British currency.
First, here are the latest rates to reference when considering the forecasted numbers:
The pound to dollar conversion rate (GBP-USD) is at 1.5373. Bank spreads indicate your bank is offering a rate in the region of 1.4770.
Independent FX providers are seen to be delivering rates around 1.5265.
The pound to euro conversion (GBP-EUR) is at 1.3564 at the start of the new week. Spreads show major banks are offering a rate at 1.3032. Independent currency providers are seen delivering closer to the market at 1.3469.
GBP v USD Forecast
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Summary:
According to analysts GBP will likely struggle for the first half of 2015 ahead of a recovery into 2016.
Robin Wilkin, Head of FX Strategy at Lloyds Bank tells us:
"The near-term outlook for GBP/USD has been revised lower to 1.47 at end-June, as we have pushed out our expectation of the first rate hike until Q4 2015
"The uncertain outcome of the General Election in May remains a potential negative factor in the first half of the year.
"Political uncertainty will leave GBP exposed to the UK’s high current account deficit and a reliance on external capital inflows.
"With the UK economy expected to maintain above-trend growth and the Bank of England predicted to start raising interest rates before the end of the year, the strength of the UK economy should see GBP/USD finding renewed support - up towards 1.55 by year-end."
GBP v EUR Forecast
Read our more detailed report here
Summary:
The key takeaway from Lloyds is that the euro may be about to put its entrenched weakness behind it.
Wilkin tells us:
"A lot of the bad news is now in the price for current euro exchange rates.
"A significant deterioration in the situation would thus be needed to prompt further selling.
"EUR short positions (CFTC) are at extreme levels.
"As Euro area tail risks fade and the economy recovers, this should trigger a squaring of EUR short positions and support a EUR recovery."
