Pound Sterling Forecast

Thursday has seen Sterling continue its recent rise in the markets, as it posted gains across the board by close of European trading. GBP has performed particulalry well against the euro for the past couple of weeks, showing almost daily gains. With the currency pair closing in on the almost sacred 1.30 level, the question investors will be asking is how much further can GBP go?

Analysts are quickly revising their forecasts and even this particualr analyst is now start starting to turn with the tide of opinion that 1.30 could well be in range, based on the current economic climate. It has to be remembered however that we have still not hit this level and by no means is it a given. I still believe that Sterling is over-valued by at least a couple of cents against the single currency but the deep rooted economic and fiscal deficiencies in Europe, are hampering the euro’s chances of even a short-term recovery. It was in my opinion, the European central Banks decision to cut interest rates by 0.25% that was the catalyst for this recent spike and it has been compounded by the rising Spanish bonds, which remain above the critical 7% level. Add to this the revelation by Italian leaders that they to will most likely require some sort of EU funded financial bailout and you can start to see a bleak picture unfolding for the short to mid-term recovery of the euro.

Sterling has also seen gains against the USD, with almost half a cent added to Sterling’s value during Thursdays trading, rising above 1.57 on the Interbank. This may have been boosted today by the release of UK retail sales, which showed an increase in June. The US Federal reserve chairman Ben Bernanke also reiterated his stance that the FED is prepared to act if necessary to boost the US economy. This in turn may have boosted global market confidence, which could be another reason the USD has fallen off slightly, as investors will have started to move away from the ‘safe haven’ Dollar.

If you have any currency requirements and would like to be kept up to date with all the latest market movements, or be alerted when your target rate becomes available as a trading level, then please feel free to conatct me directly at mtv@currencies.co.uk or on 01494 787 478.