Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Sterling to weaken by end-year before regaining lost ground: Reuters poll

EconomySep 03, 2020 11:30PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: Pound banknotes are seen in this illustration

By Jonathan Cable

LONDON (Reuters) - Sterling will lose some of its recent gains against a weaker dollar as year-end approaches, hurt by Brexit uncertainty and fears surrounding the coronavirus pandemic, a Reuters poll showed on Friday.

The pound hit an eight-month high against the greenback on Tuesday of over $1.34 but has since drifted lower after Bank of England policymakers warned that Britain's economy could suffer more damage than anticipated.

Britain has suffered the highest number of deaths from COVID-19 in Europe and lockdown measures imposed to try to stop the virus spreading further meant the economy contracted a record 20.4% in the last quarter.

The level of Britain's economic output would permanently be about 1.5 percentage points lower than it would have been without the pandemic, BoE Deputy Governor Dave Ramsden said on Wednesday and he warned the number could be higher.

To support the economy, like many its global peers, the central bank has slashed borrowing costs to a record low and ramped up its bond purchases.

On the flipside, the U.S. Federal Reserve has signalled its willingness to keep interest rates low for a prolonged period, weakening the dollar's outlook.

So while according to the Aug. 28-Sept. 3 Reuters poll of more than 60 foreign exchange strategists, cable would be trading at $1.31 in a month compared to the $1.33 it was hovering near on Thursday it would be back at $1.34 in a year.

That is higher than the $1.31 median forecast in an August poll but highlighting the uncertainty the 12-month forecast range was wide, going from as low as $1.20 all the way up to $1.47.

"The UK is under pressure from all sides – Brexit, COVID-19 and structural capital outflows," noted strategists at Jyske Bank.

"However, GBP remains undervalued, UK equities are heavily underweighted, and our main scenario is ultimately a limited, 11th-hour trade agreement with the EU."

Alongside trying to recover from the damage from the pandemic, Britain faces the added challenge of trying to agree a trade deal with the European Union before a transition period following its departure from the bloc finishes at the end of this year.

Successive Reuters polls have said a deal will be reached but the talks have been fractious and little progress has been made so at the end of November, a month before the transition period ends, sterling will be down at $1.30, the poll showed.

"Despite the current standstill in negotiations, we think that a basic FTA is still narrowly the most likely scenario this autumn. We think it's unrealistic to expect a sudden plunge in GDP once the transition period ends," said James Smith at ING.

Against the euro (EURGBP=), little movement was expected. One euro was worth around 89.0 pence on Thursday, and the poll suggested it would be worth 90.0p in a month and 89.0p again in a year.

Sterling to weaken by end-year before regaining lost ground: Reuters poll

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email