The British pound is forecast to fall to record lows against the US dollar in 2023 as the seemingly inexorable slide continues in the coming months, but against the euro the British currency appears better supported. That’s according to new forecasts and research released by Capital Economics, an independent research provider, which shows the “cost of living crisis” will be the most severe for sterling. “If we are right to expect the UK economy to contract by around 1% at the same time as high inflation prevents the Bank of England from providing any support, then the pound should probably fall further. Our forecast is for sterling on a trade-weighted basis to depreciate by a further 5% by the end of 2022,” says Paul Dales, Chief UK Economist at Capital Economics. The call comes at a time of significant selling pressure for the pound, which this week has fallen to its lowest level against the dollar since March 2020, a time when markets were dominated by Covid panic. The pound to euro exchange rate is 1.78% lower this week alone at 1.1572, taking bank account rates for euro payments to around 1.1167 and rates to independent providers to around 1.1537. The Pound to Dollar exchange rate fell by 1.56% this week, taking bank account rates for dollar payments to around 1.1320 and rates and independent providers to around 1.1520. Much of the decline was fueled by the continued rise in the value of the US dollar, with the Bloomberg Dollar Index hitting a record high on September 1. However, sterling’s weakness is evident against other major currencies, including the euro, confirming a distinct UK-centric flavor to the selling pressure. “We believe that the UK has slipped into recession, while the US may have avoided it. If anything, the recent rise in UK gas prices suggests that risks are tipping towards a deeper and longer recession in the UK.” , says Dales. The dollar’s rampant rise also comes amid a continued decline in “risk assets,” most evident in the fall in global stock markets. Investors fear a major global economic slowdown is underway amid a combination of war in Europe, China’s stubborn insistence on “zero Covid” and excruciating rate hikes by the Federal Reserve as it battles to tame inflation. Where the dollar is a beneficiary in times of global investor panic, the pound tends to be a loser. If you are concerned about current exchange rate fluctuations, you may consider locking in today’s exchange rate for future use to protect against adverse movements, learn more here. “We now expect a mild recession globally. The resulting fall in risk appetite will hurt the pound, which, due to the UK’s large current account deficit, tends to behave more as a risk asset than a safe haven,” says Dales. Above: GBP/USD & UK lower US 1-year rate expectations. Image courtesy of Capital Economics. Bank of England policy and UK interest rates will likely prove unsupportive for sterling, according to Capital Economics. “Interest rate expectations will be a headwind for sterling against the dollar and euro,” says Dales. Above: GBP/EUR & Expectations of Fewer UK 1-Year Interest Rates. Image courtesy of Capital Economics. Don’t miss the ideal exchange rate, set a free alert here. The Bank of England is expected to raise interest rates by a further 50 basis points in September, with markets expecting Bank Rate to peak at 4.30% by 2023. In fact, financial markets now show that investors expect more rate hikes from the Bank of England in the rest of 2022 than any other major central bank, reflecting the UK’s excruciatingly high inflation rates. The ability to achieve expected ~180bp hikes by the end of the year is questionable as it implies at least one 75 basis point hike from the Bank before the end of the year. Judging by the continued poor performance of sterling it appears that the foreign exchange market has long since decided that the Bank will not be able to meet these expectations. Above: Market expectations for the future of the Bank of England Bank Rate. Derived from 3 years forward expectations. Image courtesy of Goldman Sachs. “We think UK rates will rise much less than money markets are now discounting, but that investors are broadly right about the degree of tightening needed in the eurozone and the US,” says Dales. Given the above expectations, Capital Economics now believes that the pound will fall below the pre-Plaza levels of 1985 ($1.09), following the UK’s withdrawal from the Exchange Rate Mechanism in 1992 ( $1.43), during the 2008/09 Global Financial Crisis ($1.38), after the 2016 Brexit vote ($1.21) and during the 2020 COVID-19 crisis ($1 .$21). The Pound to Dollar exchange rate is forecast to fall to 1.05 by mid-2023, “in fact $1.05 would be an all-time low,” says Dales. Capital Economics believes the euro-dollar rate will fall to a low of 0.90. Meanwhile, the pound to euro exchange rate is forecast at 1.17 by mid-2023, confirming that there may be little to differentiate the Euro from the Pound. Elsewhere, the FTSE 100 is forecast to fall around 10% to 6,700 between now and the end of 2022. “The risk is that the UK recession is deeper than we expect and UK share prices fall further,” says Dales.
title: “Record Low Forecast For Pound Sterling Klmat” ShowToc: true date: “2022-11-17” author: “Beatrice Buresh”
The British pound is forecast to fall to record lows against the US dollar in 2023 as the seemingly inexorable slide continues in the coming months, but against the euro the British currency appears better supported. That’s according to new forecasts and research released by Capital Economics, an independent research provider, which shows the “cost of living crisis” will be the most severe for sterling. “If we are right to expect the UK economy to contract by around 1% at the same time as high inflation prevents the Bank of England from providing any support, then the pound should probably fall further. Our forecast is for sterling on a trade-weighted basis to depreciate by a further 5% by the end of 2022,” says Paul Dales, Chief UK Economist at Capital Economics. The call comes at a time of significant selling pressure for the pound, which this week has fallen to its lowest level against the dollar since March 2020, a time when markets were dominated by Covid panic. The pound to euro exchange rate is 1.78% lower this week alone at 1.1572, taking bank account rates for euro payments to around 1.1167 and rates to independent providers to around 1.1537. The Pound to Dollar exchange rate fell by 1.56% this week, taking bank account rates for dollar payments to around 1.1320 and rates and independent providers to around 1.1520. Much of the decline was fueled by the continued rise in the value of the US dollar, with the Bloomberg Dollar Index hitting a record high on September 1. However, sterling’s weakness is evident against other major currencies, including the euro, confirming a distinct UK-centric flavor to the selling pressure. “We believe that the UK has slipped into recession, while the US may have avoided it. If anything, the recent rise in UK gas prices suggests that risks are tipping towards a deeper and longer recession in the UK.” , says Dales. The dollar’s rampant rise also comes amid a continued decline in “risk assets,” most evident in the fall in global stock markets. Investors fear a major global economic slowdown is underway amid a combination of war in Europe, China’s stubborn insistence on “zero Covid” and excruciating rate hikes by the Federal Reserve as it battles to tame inflation. Where the dollar is a beneficiary in times of global investor panic, the pound tends to be a loser. If you are concerned about current exchange rate fluctuations, you may consider locking in today’s exchange rate for future use to protect against adverse movements, learn more here. “We now expect a mild recession globally. The resulting fall in risk appetite will hurt the pound, which, due to the UK’s large current account deficit, tends to behave more as a risk asset than a safe haven,” says Dales. Above: GBP/USD & UK lower US 1-year rate expectations. Image courtesy of Capital Economics. Bank of England policy and UK interest rates will likely prove unsupportive for sterling, according to Capital Economics. “Interest rate expectations will be a headwind for sterling against the dollar and euro,” says Dales. Above: GBP/EUR & Expectations of Fewer UK 1-Year Interest Rates. Image courtesy of Capital Economics. Don’t miss the ideal exchange rate, set a free alert here. The Bank of England is expected to raise interest rates by a further 50 basis points in September, with markets expecting Bank Rate to peak at 4.30% by 2023. In fact, financial markets now show that investors expect more rate hikes from the Bank of England in the rest of 2022 than any other major central bank, reflecting the UK’s excruciatingly high inflation rates. The ability to achieve expected ~180bp hikes by the end of the year is questionable as it implies at least one 75 basis point hike from the Bank before the end of the year. Judging by the continued poor performance of sterling it appears that the foreign exchange market has long since decided that the Bank will not be able to meet these expectations. Above: Market expectations for the future of the Bank of England Bank Rate. Derived from 3 years forward expectations. Image courtesy of Goldman Sachs. “We think UK rates will rise much less than money markets are now discounting, but that investors are broadly right about the degree of tightening needed in the eurozone and the US,” says Dales. Given the above expectations, Capital Economics now believes that the pound will fall below the pre-Plaza levels of 1985 ($1.09), following the UK’s withdrawal from the Exchange Rate Mechanism in 1992 ( $1.43), during the 2008/09 Global Financial Crisis ($1.38), after the 2016 Brexit vote ($1.21) and during the 2020 COVID-19 crisis ($1 .$21). The Pound to Dollar exchange rate is forecast to fall to 1.05 by mid-2023, “in fact $1.05 would be an all-time low,” says Dales. Capital Economics believes the euro-dollar rate will fall to a low of 0.90. Meanwhile, the pound to euro exchange rate is forecast at 1.17 by mid-2023, confirming that there may be little to differentiate the Euro from the Pound. Elsewhere, the FTSE 100 is forecast to fall around 10% to 6,700 between now and the end of 2022. “The risk is that the UK recession is deeper than we expect and UK share prices fall further,” says Dales.
title: “Record Low Forecast For Pound Sterling Klmat” ShowToc: true date: “2022-12-11” author: “Sallie Gonzales”
The British pound is forecast to fall to record lows against the US dollar in 2023 as the seemingly inexorable slide continues in the coming months, but against the euro the British currency appears better supported. That’s according to new forecasts and research released by Capital Economics, an independent research provider, which shows the “cost of living crisis” will be the most severe for sterling. “If we are right to expect the UK economy to contract by around 1% at the same time as high inflation prevents the Bank of England from providing any support, then the pound should probably fall further. Our forecast is for sterling on a trade-weighted basis to depreciate by a further 5% by the end of 2022,” says Paul Dales, Chief UK Economist at Capital Economics. The call comes at a time of significant selling pressure for the pound, which this week has fallen to its lowest level against the dollar since March 2020, a time when markets were dominated by Covid panic. The pound to euro exchange rate is 1.78% lower this week alone at 1.1572, taking bank account rates for euro payments to around 1.1167 and rates to independent providers to around 1.1537. The Pound to Dollar exchange rate fell by 1.56% this week, taking bank account rates for dollar payments to around 1.1320 and rates and independent providers to around 1.1520. Much of the decline was fueled by the continued rise in the value of the US dollar, with the Bloomberg Dollar Index hitting a record high on September 1. However, sterling’s weakness is evident against other major currencies, including the euro, confirming a distinct UK-centric flavor to the selling pressure. “We believe that the UK has slipped into recession, while the US may have avoided it. If anything, the recent rise in UK gas prices suggests that risks are tipping towards a deeper and longer recession in the UK.” , says Dales. The dollar’s rampant rise also comes amid a continued decline in “risk assets,” most evident in the fall in global stock markets. Investors fear a major global economic slowdown is underway amid a combination of war in Europe, China’s stubborn insistence on “zero Covid” and excruciating rate hikes by the Federal Reserve as it battles to tame inflation. Where the dollar is a beneficiary in times of global investor panic, the pound tends to be a loser. If you are concerned about current exchange rate fluctuations, you may consider locking in today’s exchange rate for future use to protect against adverse movements, learn more here. “We now expect a mild recession globally. The resulting fall in risk appetite will hurt the pound, which, due to the UK’s large current account deficit, tends to behave more as a risk asset than a safe haven,” says Dales. Above: GBP/USD & UK lower US 1-year rate expectations. Image courtesy of Capital Economics. Bank of England policy and UK interest rates will likely prove unsupportive for sterling, according to Capital Economics. “Interest rate expectations will be a headwind for sterling against the dollar and euro,” says Dales. Above: GBP/EUR & Expectations of Fewer UK 1-Year Interest Rates. Image courtesy of Capital Economics. Don’t miss the ideal exchange rate, set a free alert here. The Bank of England is expected to raise interest rates by a further 50 basis points in September, with markets expecting Bank Rate to peak at 4.30% by 2023. In fact, financial markets now show that investors expect more rate hikes from the Bank of England in the rest of 2022 than any other major central bank, reflecting the UK’s excruciatingly high inflation rates. The ability to achieve expected ~180bp hikes by the end of the year is questionable as it implies at least one 75 basis point hike from the Bank before the end of the year. Judging by the continued poor performance of sterling it appears that the foreign exchange market has long since decided that the Bank will not be able to meet these expectations. Above: Market expectations for the future of the Bank of England Bank Rate. Derived from 3 years forward expectations. Image courtesy of Goldman Sachs. “We think UK rates will rise much less than money markets are now discounting, but that investors are broadly right about the degree of tightening needed in the eurozone and the US,” says Dales. Given the above expectations, Capital Economics now believes that the pound will fall below the pre-Plaza levels of 1985 ($1.09), following the UK’s withdrawal from the Exchange Rate Mechanism in 1992 ( $1.43), during the 2008/09 Global Financial Crisis ($1.38), after the 2016 Brexit vote ($1.21) and during the 2020 COVID-19 crisis ($1 .$21). The Pound to Dollar exchange rate is forecast to fall to 1.05 by mid-2023, “in fact $1.05 would be an all-time low,” says Dales. Capital Economics believes the euro-dollar rate will fall to a low of 0.90. Meanwhile, the pound to euro exchange rate is forecast at 1.17 by mid-2023, confirming that there may be little to differentiate the Euro from the Pound. Elsewhere, the FTSE 100 is forecast to fall around 10% to 6,700 between now and the end of 2022. “The risk is that the UK recession is deeper than we expect and UK share prices fall further,” says Dales.
title: “Record Low Forecast For Pound Sterling Klmat” ShowToc: true date: “2022-12-02” author: “Erika Caldwell”
The British pound is forecast to fall to record lows against the US dollar in 2023 as the seemingly inexorable slide continues in the coming months, but against the euro the British currency appears better supported. That’s according to new forecasts and research released by Capital Economics, an independent research provider, which shows the “cost of living crisis” will be the most severe for sterling. “If we are right to expect the UK economy to contract by around 1% at the same time as high inflation prevents the Bank of England from providing any support, then the pound should probably fall further. Our forecast is for sterling on a trade-weighted basis to depreciate by a further 5% by the end of 2022,” says Paul Dales, Chief UK Economist at Capital Economics. The call comes at a time of significant selling pressure for the pound, which this week has fallen to its lowest level against the dollar since March 2020, a time when markets were dominated by Covid panic. The pound to euro exchange rate is 1.78% lower this week alone at 1.1572, taking bank account rates for euro payments to around 1.1167 and rates to independent providers to around 1.1537. The Pound to Dollar exchange rate fell by 1.56% this week, taking bank account rates for dollar payments to around 1.1320 and rates and independent providers to around 1.1520. Much of the decline was fueled by the continued rise in the value of the US dollar, with the Bloomberg Dollar Index hitting a record high on September 1. However, sterling’s weakness is evident against other major currencies, including the euro, confirming a distinct UK-centric flavor to the selling pressure. “We believe that the UK has slipped into recession, while the US may have avoided it. If anything, the recent rise in UK gas prices suggests that risks are tipping towards a deeper and longer recession in the UK.” , says Dales. The dollar’s rampant rise also comes amid a continued decline in “risk assets,” most evident in the fall in global stock markets. Investors fear a major global economic slowdown is underway amid a combination of war in Europe, China’s stubborn insistence on “zero Covid” and excruciating rate hikes by the Federal Reserve as it battles to tame inflation. Where the dollar is a beneficiary in times of global investor panic, the pound tends to be a loser. If you are concerned about current exchange rate fluctuations, you may consider locking in today’s exchange rate for future use to protect against adverse movements, learn more here. “We now expect a mild recession globally. The resulting fall in risk appetite will hurt the pound, which, due to the UK’s large current account deficit, tends to behave more as a risk asset than a safe haven,” says Dales. Above: GBP/USD & UK lower US 1-year rate expectations. Image courtesy of Capital Economics. Bank of England policy and UK interest rates will likely prove unsupportive for sterling, according to Capital Economics. “Interest rate expectations will be a headwind for sterling against the dollar and euro,” says Dales. Above: GBP/EUR & Expectations of Fewer UK 1-Year Interest Rates. Image courtesy of Capital Economics. Don’t miss the ideal exchange rate, set a free alert here. The Bank of England is expected to raise interest rates by a further 50 basis points in September, with markets expecting Bank Rate to peak at 4.30% by 2023. In fact, financial markets now show that investors expect more rate hikes from the Bank of England in the rest of 2022 than any other major central bank, reflecting the UK’s excruciatingly high inflation rates. The ability to achieve expected ~180bp hikes by the end of the year is questionable as it implies at least one 75 basis point hike from the Bank before the end of the year. Judging by the continued poor performance of sterling it appears that the foreign exchange market has long since decided that the Bank will not be able to meet these expectations. Above: Market expectations for the future of the Bank of England Bank Rate. Derived from 3 years forward expectations. Image courtesy of Goldman Sachs. “We think UK rates will rise much less than money markets are now discounting, but that investors are broadly right about the degree of tightening needed in the eurozone and the US,” says Dales. Given the above expectations, Capital Economics now believes that the pound will fall below the pre-Plaza levels of 1985 ($1.09), following the UK’s withdrawal from the Exchange Rate Mechanism in 1992 ( $1.43), during the 2008/09 Global Financial Crisis ($1.38), after the 2016 Brexit vote ($1.21) and during the 2020 COVID-19 crisis ($1 .$21). The Pound to Dollar exchange rate is forecast to fall to 1.05 by mid-2023, “in fact $1.05 would be an all-time low,” says Dales. Capital Economics believes the euro-dollar rate will fall to a low of 0.90. Meanwhile, the pound to euro exchange rate is forecast at 1.17 by mid-2023, confirming that there may be little to differentiate the Euro from the Pound. Elsewhere, the FTSE 100 is forecast to fall around 10% to 6,700 between now and the end of 2022. “The risk is that the UK recession is deeper than we expect and UK share prices fall further,” says Dales.
