Pound sterling: Morgan Stanley slashes forecast ahead of UK general election

'For sterling to do better, we need to see Brexit negotiations turning constructive,' said a report by the US investment bank

Jamie McGreever
Monday 05 June 2017 13:36
Comments
Morgan Stanley ditched its out-of-consensus call made in March that the UK currency would reach $1.45 by the end of next year
Morgan Stanley ditched its out-of-consensus call made in March that the UK currency would reach $1.45 by the end of next year

Morgan Stanley has slashed its long-term sterling forecast, ditching its out-of-consensus call made in March that the UK currency would reach $1.45 by the end of next year.

The pound's rise to around $1.30 after Prime Minister Theresa May in April called a general election has reduced its undervaluation and the scale of market bets on further weakness, currency analysts at the US investment bank said in their mid-year outlook.

“The bull case (for sterling) has become less convincing, with the economy now showing signs of weakness. For sterling to do better, we need to see Brexit negotiations turning constructive, allowing markets to assume the British economy avoiding a cliff-edge Brexit,” they said in the report published late on Sunday.

They now expect the pound's peak next year to be $1.26 in the first quarter, slipping to $1.23 by the end of the year. In March, when sterling was in the low $1.20s, they predicted that sterling would rise as high as $1.45 by the end of 2018.

They also turned much more bullish on the euro, ditching their call for a break below parity with the dollar later this year and now predicting a rise as high as $1.19 early next year.

Reuters

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in