The G20 summit took place in Bali, Indonesia, on November 2022…
Bank of America: GBP Will Rise in 2021
Information is not investment advice
The British pound has advanced in the first half of the year, especially against the euro. Will this trend sustain in the second part of 2021?
Bank of America has published its mid-year forecast on the GBP. The bank believes the pound has more room to rally up further. The reasons are the UK's successful vaccination rollout and the Bank of England hawkish pivot. The BoE is likely to raise interest rates in 2022, ahead of many G10 peers.
The group of Ten (G10) is made up of eleven (yes, it’s strange) industrial countries (Belgium, Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom, and the United States) that meet on annual basis to consult each other and cooperate on international financial matters.
According to Bank of America, the British pound will mostly outperform the Japanese yen and the Swiss Franc - both currencies with ultra-low interest rates. Besides, the UK PM Boris Johnson claimed that he would cancel the coronavirus restrictions, which would be positive for the pound.
EUR/GBP has bounced off the 50- and 100-day moving averages and reversed to the downside. The move below the low of June 24 at 0.8530 will press the pair down to the next round number at 0.8500. The pair is likely to move down in the mid and long term. Still, if some fundamentals shock the markets and the pair breaks above the upper trend line at 0.8600, it may jump to 0.8650.
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After months of pressure from the White House, Saudi Arabia relented and agreed with other OPEC+ members to increase production.
On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.