GBP/USD to Recover Some Losses in a Year, But Outlook Weakens Since Last Month
Economists polled by Reuters expect the British pound to recover some of its recent losses against the US dollar in a year’s time, but the outlook for the currency remains grim in the near future due to the ongoing coronavirus pandemic. The recent panic mode in global markets had caused the GBP and other currencies to weaken as a result of the sell-offs amid a rush for the dollar.
According to economists, GBP/USD could touch 1.22 within a month but recover to 1.25 over the next six months. In about a year from now, the Cable could reclaim around 4% of its value and rise to 1.29 as the coronavirus crisis eases.
However, the recent poll reflects a lowering in the outlook for this currency pair from a month ago, when GBP/USD levels for one month, six months and one year stood at 1.29, 1.32 and 1.35 respectively. This is the steepest decline in outlook for this forex pair since the Brexit referendum back in 2016.
While the BOE has already unveiled several stimulus measures including two emergency rate cuts, the performance of GBP/USD in the near future will depend on how effectively these efforts as well as the government’s fiscal stimulus will aid in economic recovery after the coronavirus crisis is managed.
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