1. Newsroom
  2. Change of fortune for the British pound
Menu
Analisi 08.06.2020

Change of fortune for the British pound

Change of fortune for the British pound

Our Global Head of Forex Strategy, Peter Kinsella, discusses our updated outlook on sterling



The outlook for GBP exchange rates has become much more ominous. The COVID-19 pandemic has led to a significant decline in growth and consequently an increase in government indebtedness. The Bank of England (BoE) has cut interest rates to 0.1% and restarted its quantitative easing programme, as had been expected by many analysts. However, the BoE is said to be seriously considering the possibility of introducing negative deposit rates. This would be the first time that a country with a large current-account deficit applied such a policy. We think that this would be a highly negative development for GBP exchange rates, due to the importance of portfolio flows in balancing the UK’s current-account deficit.

A second risk looming on the horizon is the ongoing state of EU–UK trade negotiations. EU Chief Negotiator Michel Barnier has noted that little substantive progress has been made in the talks. Consequently, we think that the chances of the EU and the UK failing to agree to a trade deal are around 50:50. This risk will crystallise as we move into late June and nearer to the UK’s self-imposed negotiation deadline. As a result of these factors we now anticipate that sterling will weaken over the coming weeks and, at a minimum, we expect that GBP exchange-rate volatility will increase materially.

Our expertise

Peter_Kinsella_150x150.jpg
Peter Kinsella
Global Head of Forex Strategy

Expertise

Impact investing - Contributing to a more sustainable future

What are the key features of impact investing?

Read more

Le news più lette

Analisi 01.10.2020

COVID-19: UBP vi terrà aggiornati

Dalla comparsa del coronavirus, UBP accompagna e sostiene i suoi clienti nel contesto inedito di questa crisi sanitaria mondiale. La Banca vi aggiorna regolarmente sull’adeguamento dei suoi piani alle regole precauzionali fissate dalle autorità e condivide con voi le più aggiornate analisi dei suoi esperti sulle conseguenze della pandemia per l’economia mondiale e i mercati finanziari.

Analisi 30.06.2020

Aggiornamento delle prospettive di investimento per il 2020

L’economia globale al bivio

Analisi 24.06.2020

Market turmoil brings new opportunities for pragmatic investors

March 2020 was difficult time for many investors, as COVID-19 spread across Europe and the US, leading to sharp sell-offs in fixed-income credit markets. While such market turbulence is not to be welcomed, its occurrence can create opportunities.

Altro da leggere

Analisi 23.10.2020

Podcast - No election rally for the dollar

Our Global Head of Forex Strategy, Peter Kinsella, shares his thoughts on the forthcoming US presidential election.

Analisi 15.10.2020

The draw of the booming fintech sector

Martin Moeller, Portfolio Manager of our newly launched strategy, shares his view on why global fintech equities are an interesting investment right now.

Analisi 05.10.2020

Webinar – Opportunities in the Gold Mining Sector

On Thursday 1 October 2020, UBP's experts Norman Villamin and Peter Kinsella hosted a webinar with Evy Hambro, Global Head of Thematic and Sector Investing at Blackrock, to discuss what gold investors can expect in the quarters ahead.