GBP/USD: banks’ near-term forecasts

GBP/USD: banks’ near-term forecasts

2019-11-11 • Updated

Bank of America FX Strategy Research notes that GBP has been broadly lower in the aftermath of the BoE decision with some of the main pairs having failed to break through resistance in recent weeks.

Sterling fell on last Thursday following the BoE’s rate announcement. The 7-1 vote to keep the rate on hold disappointed pound’s bulls. The BoE’s Governor Carney’s comments that Monetary Policy Committee might decide to raise rates faster than markets expect if the Brexit negotiations run smoothly failed to convince investors. Following the disappointing release of the American CPI figures GBP/USD rose higher. Here are the banks’ forecasts for the future exchange rate of GDP/USD.

Bank of America Merrill Lynch

Now the focus for traders shifts to UK data-watching with CPI release and retail sales both coming on Tuesday.

The Bank of America’s strategists believe that pound might meet several headwinds looking ahead. The US economic data indicates further signs of weakness. The uncertainty amid upcoming General elections also weights on the pound. Markets appear to be priced for a Conservative majority. The opposite outcome might hurt the pound.

The bank’s analysts suggest selling GBP/USD on rallies in the coming weeks.


Nomura’s analysts hold the opposite view. The believe that the pound might gain some strength in the medium term due to the following factors:

  • the inflation premium in GBP looked overstretched.
  • the Bank of England will probably become less pessimistic due to a better global growth.
  • the difficulties associated with the Brexit process are already priced in.

The strategists indicate that the next risk event for the pound will be the 8 June general election. An outcome with the strong majority for the conservatives will be favorable for the pound.  

Nomura analysts expect GBP/USD to test 1.37 by year-end. Also, they recommend going long on GBP against USD, EUR, and AUD in the second half of the year. 

The both teams of analysts suggest focusing on the UK general election as the next risk event for pound. This event might differently affect the GBP value. It will depend on the following factors:

  1. how the outcome of the elections will affect the EU-UK negotiation process and terms on which the UK leaves the single European union.
  2. how the General Elections will change the prospect for and possible outcome of a second Scottish independence referendum; and

Going forward, it is easier to make a bet for the pound’s depreciation rather than for its upsurge with the steady ongoing deterioration in UK fundamentals, and uncertainty over the June General Elections. In the short-term the Bank of America's strategy looks attractive.


Pound Sterling’s Foggy Future
Pound Sterling’s Foggy Future

Weaker recoveries were seen in both the UK manufacturing and service sectors, with the latter recording the greatest loss of momentum since July.

Latest news

Is JPY Ready to Reclaim All-Year High?
Is JPY Ready to Reclaim All-Year High?

Between October 2022, and January 2023, the Japanese Yen outperformed several other currency pairs, resulting in over a thousand pips move on pairs like EURJPY, GBPJPY, and 2000-plus...

How Will Euro Move After the ECB
How Will Euro Move After the ECB

The European Central Bank (ECB) raised its interest rates by 0.5% to 3%, as planned, to combat inflation, despite some investors'...

Key Moment for the Oil Market
Key Moment for the Oil Market

Oil prices fell to a three-month low following the release of US inflation data which was in line with expectations. The annual inflation rate of 6%...

Deposit with your local payment systems

Feel the Team Spirit

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.


A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

Beginner Forex book

Beginner Forex book will guide you through the world of trading.

Beginner Forex book

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera