Sorry Goldman, Not Yet Sorry Goldman, Not Yet

Why the Pound Won’t Rally Anytime Soon

This morning the news was buzzing with Goldman Sachs’s latest take on the British pound.

The esteemed Goldman analysts predicted this month that sterling will appreciate 9% versus the euro to 84 pence by year-end, and by 14% to $1.85.

Here’s our experts take on it….

Sean Hyman: Right now I say Goldman is just jumping the gun. Economists are now speculating that the Bank of England (BOE) may have to crank back up the bond asset purchase program due to their horrible GDP numbers last week.

The technical uptrend in EUR/GBP is still intact. So the euro is still rising versus the pound. The major moving averages are also crossing each other. From a technical perspective, that’s a bullish candle pattern, and tells me the euro will rise versus the pound still.

Now I will say this: The UK actually has inflation and the Eurozone doesn’t really. So once the Brits feel the coast is clear, they may start and accelerate rate hikes quicker than the rest of the Eurozone. If that happens in the future, Goldman may get its wish.

I just think that still could be quite a ways off. That’s just my two cents.

Ashish Advani: I’d have to agree on a macro level. The BOE is still doing quantitative easing, which means we won’t see a rally soon. Watch for the pound to fall further.

I’ll be back here soon with more notes from the talented FX insiders on our currency team. Till then…

Good Currency Investing,
Kat Von Rohr, Managing Editor
World Currency Watch

Average rating
(0 votes)