GBP - Recent Performance
2018 started well for the British pound. The currency climbed in mid-January to a 19-month high against the dollar of $1.374 after news broke that the Netherlands and Spain had agreed to seek a Brexit deal that would keep Britain as close to the EU as possible – indicative of a softer Brexit. Sterling was stable against the euro, buying roughly €1.125.
In 2017, sterling had risen steadily against the dollar, from levels in the $1.19s in January to $1.35 by the end of December. However, like all other G10 currencies, it lost value against the euro (roughly 4%).
In 2018, sterling is set to climb to $1.50 against USD according to forecasters at Dutch bank ING. The British currency will be assisted by broad US dollar weakness, a “positive re-appraisal of the UK economic outlook” and a “hawkish re-pricing of Bank of England policy expectations” that will follow a UK-EU trade deal.
Against the euro, sterling will likely suffer in 2018. Analysts at UBS predict GBP/EUR to fall to 1.05 by year-end, from December '17 rates near 1.126.