Forex analysts at the commercial and investment bank Investec raised their forecast for GBP/USD. The decision was based on the expectation that the Bank of United Kingdom would abandon its August rate cut, and that the arrival of a new government would improve investor confidence in United Kingdom assets.
Philip Shaw, economist at Investec, said: "The United Kingdom government's policymaking has been chaotic over the past few years, particularly since the 2016 EU referendum, leading to a degree of aversion to United Kingdom assets. This may decrease over time. ”
Shaw said the new government's main goal is to increase GDP growth to 2.5 percent, likely first by getting people back into the labor market and then by increasing labor productivity. The United Kingdom has been somewhat abandoned in recent years, and if the government comes close to success in achieving higher growth, this could benefit a variety of asset classes in the United Kingdom, including United Kingdom equities.
Investec noted that United Kingdom economic activity is picking up, which has eased pressure on the United Kingdom central bank to cut interest rates, especially given lingering questions about the trajectory of inflation. "As a result, we have raised our view on the pound," Shaw said. ”
Investec now expects GBPUSD to rebound to 1.32 by the end of the year and 1.35 by the end of 2025.
The pound is the best performing G10 currency, confidence in the United Kingdom has improved, and relatively high interest rates in the United Kingdom continue to support the pound. Investor optimism about the pound has reached record levels, according to the latest data showing how global investors view the currency.
GBP/USD daily chart, source: Yihuitong
At 9:03 Beijing time on July 26, the pound was quoted at 1.2855/56 against the dollar
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