Investing.com – UBS cut its forecast for sterling strength Thursday on expectations that the Bank of England (BoE) will need to embark on further easing measures.
“In our view, it is very likely that further monetary easing will be delivered in the coming months, which would weaken sterling,” the Swiss strategists explained in a note to clients.
UBS saw GBP/USD falling to 1.25, while they lifted their forecast for EUR/GBP three months out to 0.86.
These analysts considered that “the fact that the BoE had almost ruled out negative rates” would place a floor of $1.20 under cable and a ceiling of 0.90 on the euro-pound.
“However, with the expectation of a weakening economy, further easing down the road, and negotiations on the future of UK’s relationship with the European Union still outstanding, we anticipate more weakness for sterling in the coming months," they said.