After huge volatility in September and October, the pound/dollar (GBP/USD) performed quite well in November and early December. The pair’s quotes returned to the levels at which it was traded in August, before fiscal concerns prevailed, which prevailed in September. However, the current rally is short-lived, RBC Capital Markets analysts believe, forecasting a return of the pound to a downward trend.
Pound to Dollar (GBP/USD) RBC Capital Markets Downward Forecast
Economists at RBC Capital Markets expect the negative pound/dollar (GBP/USD) trend to re-emerge in the future. “The UK is one of the clearest examples of how markets continue to overestimate the prospect of central bank tightening. After a move of 50 bp at the December BoE meeting, the market is pricing in a further 105 bp of tightening before rates reach around the middle of next year. RBC analysts said. Meanwhile, RBC economists expect a tightening of only 75 bp, with the last hike expected in Q1 2023, as according to them, weak data on economic activity are starting to dominate over still high inflation readings.
Also check: The price of Brent crude oil has fallen more than 8% since early December. The end of the rally? Moreover, the UK economy could soon face a severe recession, with double-digit inflation, 6% budget deficit (according to OECD estimates) and the current account deficit also at the level of 6%. Trade cryptocurrencies, stocks and Forex as CFDs with Vantage Marketes. Access global markets on ProTrader with TradingView charts START INVESTING
“We expect the poor performance of the GBP and the decline in the exchange rate to continue in the medium term. – said RBC analysts. The forecast for the GBP/USD rate prepared by RBC assumes the level of $ 1.22. in Q1 2023, then $1.18. in Q2. Then the downward move to $1.15 would continue. in Q3 and $1.11. at the end of the year.
The technical situation of the pound (GBP/USD) exchange rate – JP Morgan analysis
The pound/dollar (GBP/USD) traded against strong resistance at $1.2446. last week, which is also a 61.8% Fibo decline from mid-January this year. However, there are no signs of trend exhaustion and the pair rebounded 0.8% to $1.223. on Monday. According to JP Morgan, an additional correction should be sought to confirm the reversal of the downward trend. If this does not happen, it is possible that the uptrend will continue:
The author also recommends:
Follow us on Google News. Search for what is important and stay up to date with the market! Follow us >>