Analysts at Goldman Sachs are now expecting the pound to dollar forecast to increase up to $1.35 in value towards the end of 2024. However, there is not any consensus on this matter. This should not be surprising, as a lot can change in a year’s time in the forex market. Analysts at HSBC, by comparison, believe that the pound vs dollar forecast could go down to 1.18 in this same time frame.
GBP/USD trading has been in a volatile mood this last week. However, the pound did overall manage to exploit the dollar’s weakness as the rate increased to 1.27 as the dollar retreated.
There are several other factors that influenced the Sterling at this time. A recent data release from the UK caused the BoE to change its interest rate strategy. Inflation lowered down to 3.9% for November, from a previous 4.6%. This was an even faster loss than analysts were expecting, as they forecast inflation to reach 4.4% for the month. The core rate went from 5.7% to 5.1% during this time as well.
This would have plummeted the pound, but the dollar suffered an even greater loss at the exact same time. Therefore, the pound won out overall. Furthermore, the market has been feeling more incentivised towards risk in recent weeks. This means it is less likely to invest in the dollar while other currencies recover.
Now markets are also making speculations on the future route of the dollar. The price cut could mean an interest rate as low as 3.75% or 4% by the time the year ends. Experts have already priced in such considerations for any future pound to dollar forecast.
Some analysts, like those at Goldman Sachs, even believe that there may be as many as 5 rate cuts in the coming year. Such a scenario is why they are so bullish about the pound’s prospects. It is less about the strength of the pound, and more about the rapid weakening of the US dollar, that affects the pound to USD forecast.
