Pound to Dollar Week Ahead Forecast: No Breakout Seen Yet

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Currency exchange analysts from MUFG and ING anticipate that the Pound to Dollar exchange rate (GBP/USD) will hover slightly above 1.30 by the end of 2024 due to the dollar’s depreciation. On the other hand, HSBC predicts that GBP/USD will experience a decline throughout the year.

As of the latest report, GBP/USD remained steady at around 1.2650.

According to ING, investor interest in the carry trade will support the Pound, along with the belief that GBP/USD is undervalued and the anticipation of a weakening Dollar later in the year.

The UK’s macroeconomic discussions will intensify in the coming weeks, especially with the release of the UK budget on March 6th and ongoing debates about the Bank of England’s interest rates.

MUFG highlights that the UK budget’s potential fiscal stimulus may delay a rate cut by the Bank of England in May or June.

Bank of America expects positive impacts from the UK budget, April’s minimum wage increase, and seasonal factors, which could favor GBP overperformance.

Rabobank suggests that fiscal policy may not be a significant driver for the Pound this year, assuming fiscal restraint.

US inflation and Federal Reserve policies remain crucial for GBP, with markets closely monitoring US inflation data and Fed messaging for indications of future policy moves.

HSBC underscores the possibility of a late-cycle tightening by the Fed, although further rate hikes are considered unlikely for now.

Commerzbank notes that until there are signs challenging the Fed’s current stance, significant USD depreciation is improbable.

Bank of America addresses the US budget debate, with spending resolutions passed to prevent an immediate shutdown, but longer-term concerns persist over unsustainable budget deficits in the US.