Deutsche Bank have turned less bearish on GBP. They cite:
The driver has been the large upside surprise in the growth outlook this year, in turn providing belated interest rate and flow support to the pound. Looking ahead to 2014, the GBP will have a tough balancing act to play amid a very chunky (probably deteriorating) current account deficit driven by improving domestic demand, and better cyclical conditions raising the prospect of earlier than expected rate hikes
They expect only moderate depreciation in EUR/GBP as a result of sterling’s flow headwinds,
GBP/USD will also be vulnerable to ongoing USD strength
Sterling should continue to do well versus other G10 FX
Deutsche Bank 2014 GBP/USD forecasts:
- 1.63 in Q1,
- 1.61 in Q2,
- 1.59 in Q3
- 1.56 in Q4
For EUR/GBP:
- 0.83 in Q1,
- 0.82 in Q2,
- 0.81 in Q3
- and 0.80 in Q4.
