British Pound / Dollar Conversion Forecast to Sink to 1.52

Currency strategists at Morgan Stanley have reiterated they retain a bullish stance on the US dollar.

The British pound to dollar exchange rate (GBPUSD) continues its journey downward with current quotes at 1.5391 ensuring those transferring into USD from sterling are doing so at levels last seen in early June.

And there is little respite ahead according to one major institutional analyst we follow.

Morgan Stanley have released a note to clients confirming they forecast the US dollar to maintain a positive bias.

Commenting, Morgan Stanley say:

“We have revised our projections for most European (EUR, CHF, GBP) currencies, BRL and ILS, stronger, but this is mostly a mark-to-market exercise only.  

“The revision has become necessary as the anticipated downward correction in USD lasted longer than we originally suggested.  

“Our USD-bullish framework has remained untouched.”

Morgan Stanley are forecasting the pound to fall to 1.54 against the US dollar towards the end of 2015, pretty much around where we are now.

A further decline towards 1.53 is forecast in early 2016 ahead of an eventual fall to 1.52 in mid-year.

So while there are unlikely to be better levels for those holding pound sterling and looking to buy dollars, a major decline is not likely.

That said, from a technical perspective we are concerned.

For the pound to dollar exchange rate the looming 1.52 level will prove to be crucial. This zone has provided support on a number of occasions in 2015 and if it does not hold then we would bet on a return to the levels below 1.50 before long.

Jobless Claims Rise, But USD to Remain Bid

As the week progresses there appears to be little consistency in the performance of the dollar.  

The greenback increased in value versus the euro, Japanese Yen and Swiss Franc but was basically unchanged versus the British pound, Canadian, Australian and New Zealand dollars.

Jobless claims were the only piece of U.S. data released today and while it is not a big market mover.  

Weekly claims rose to 297k from 282k, the highest level in more than 4 months. Economists were hoping for an improvement but seasonal plant closings drove claims higher.  

Even with the increase however jobless claims remained below 300k for the 18 straight week.  

Nevertheless, the slack in the labour market continues to decline providing the case for a 2015 rate hike which should ultimately keep the US dollar bid.