Pound Surges Ahead of Analyst Forecasts That Predict 2017 Slideby
Median estimate puts sterling at $1.21 by second quarter 2017
‘Broad dollar appreciation’ seen weakening pound: Millennium
The pound’s recovery may be getting ahead of itself.
That’s according to the median estimate of economists in a Bloomberg survey, who see sterling dropping about 4 percent to $1.21 by the second quarter of 2017. The pound, which has been buffeted by Britain’s vote to leave the European Union, is currently exceeding forecasters’ estimates for that period by close to the most in three months.
Sterling climbed 2.2 percent against the dollar in November, posting its first monthly gain since April. Still, it has slumped 15 percent since the U.K. referendum in June, making the pound the Group-of-10’s worst-performing currency this year.
Richard Benson, London-based managing director and co-head of portfolio investment at Millennium Global Investments Ltd., sees the triggering of the U.K.’s exit from the EU by March, a strong dollar and weaker U.K. data helping to push sterling lower in 2017.
“It seems reasonable that the pound would head lower as part of a broad dollar appreciation,” he said. “The moment Article 50 is triggered the clock is counting down. Having recovered like we have done, most outcomes are somewhat negative from here.”
- Day By Day is the most bearish forecaster, predicting sterling will fall to $1.03 by the second quarter. Bayerische Landesbank, which was among the top 10 most-accurate forecasters in the third quarter, according to Bloomberg rankings, is next, with $1.12.
- The pound rose 0.2 percent to $1.2652 as of 7:18 a.m. in London, having touched $1.2775 on Tuesday, the highest since Oct. 4.
- Prime Minister Theresa May won lawmakers’ backing to trigger the start of Britain’s exit from the EU by the end of March on Wednesday.