GBP/USD: FOMC to overrun BoE – Westpac

GBP/USD is below 1.30 which is the mark the cable will be trading around in the next year, according to strategists at Westpac International Bank.

Key quotes

“In the lead into Brexit at the end of January, we anticipated Sterling strength. However, the honeymoon has proven much shorter than anticipated. Whereas we had forecast GBP/USD to hold around 1.32/33 through the first half of 2020, it is instead already down below USD1.30.” 

“On our current forecasts, the BOE rate cut in March will quickly be overrun by the three cuts from the FOMC, altering the monetary policy balance. That said, the US will remain in the dominant position with respect to GDP growth and presumably trade relations. We, therefore, look for GBP/USD to essentially mark time through 2020 and 2021 around USD1.30.”