NAB have revised upwards their pound sterling forecasts for 2020 through 2022. However the closer we get to a 'No-deal Brexit' the heavier the downward pressure will be on the pound.
British Pound Sterling to US dollar bank forecasts
Two senior advisers to British Prime Minister Boris Johnson have quit, creating turmoil in his inner circle. Cummings leaving is positive news for the pound with the markets thinking a ‘Brexit Deal’ more likely to happen.
After the dropping to US$1.27 towards the end of September the pound has steadily risen to 60-DAY HIGHS above US$1.32 in mid-November on hopes of a resolution to Brexit uncertainty.
Market analysts are predicting a possible drop to US$1.25 in the event of a ‘No-deal Brexit’.
Economic data will have less bearing on the GBP while Brexit uncertainty lingers. Negotiations have come down to the wire, with just days remaining to reach an agreement in time for new laws to go through UK and EU Parliaments. There is now additional pressure, the US president-elect Biden has indicated he will not support a US trade deal if the UK proceeds with proposed legislation that breaches international law. The pound will be vulnerable should the deal fall through, as trade between the UK and EU countries would revert to World Trade Organisation terms which would have a detrimental impact on trade and the economy. November Currency Update
NAB have revised upwards their pound sterling forecasts now expecting the GBP/USD rate to be at US$1.47 by June 2022, up from their previous forecast of US$1.39. For 2020, it sees GBP at US$1.36 by year-end, up from a predicted US$1.30.
Whether any substantial progress can be made on Brexit negotiations as both Britain and the European countries are fighting the pandemic will dominate GBP trends and forecasts in 2020. The closer we get to a ‘No-deal Brexit’ the heavier the downward pressure will be on the pound.
This is a difficult question and the answer really depends on many factors. The best way to consider the current GBP-USD relative value is to check the change in the exchange over a range of periods to the present day. The below table does this for periods going back 10 years.
23 Nov 2020
31 Oct 2020
01 Sep 2020
01 Dec 2019
02 Dec 2015
03 Dec 2010
GBP/USD 10 year historic rates & change to 30-Nov-2020 : 1.3325
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