Against both the US dollar and the euro, sterling starts the week 2 or 3% above the level before the Brexit deal – remember that? – was agreed before Christmas, just four very, very long weeks ago.
We might have hoped for more. Bearing in mind both the deal that was achieved and the relative advantage that the UK has over other major economies with the vaccine, perhaps a return to the pre-Covid position, 4 or 5% above the current level against the euro, might have been expected.
If you were holding out for that kind of rate, our brand new set of Quarterly Forecasts, which you can download here, will not offer much comfort. None of the major banks whose forecasts we highlight – including Barclays, Bank of America and Goldman Sachs – predict anything like a return to that level over the next 3, 6 or even 12 months.
They are a little more optimistic about GBP/USD, but overall the picture is much more about downside risk for sterling, with a return to €1.06 or below $1.30 being widely bandied about by the world’s financial experts.
If 2020 has shown anything it’s that you can’t predict the future, but all the same, if you are planning a major transaction in the year ahead there is little optimism around in the financial centres that you will find a better rate than you will find today.
So, if you are budgeting for a post-Covid escape, as I’m sure we all are, do talk to your trader on 020 8108 5337 with a view to locking in today’s rate.
