2021
The British pound to US dollar exchange rate (GBP/USD) is expected to reach its highest level in over two years in the second quarter of 2021, according to the latest forecasts from the Canadian Imperial Bank of Commerce (CIBC). The bank’s analysts believe that the pair will retest its early 2023 highs above 1.24, driven by a combination of a strong UK economic recovery and a weaker US dollar.
The CIBC’s forecast is based on the assumption that the UK economy will continue to recover from the effects of the Covid-19 pandemic, with the Bank of England (BoE) likely to raise interest rates in the second quarter of 2021. This would be a major boost for the pound, as higher interest rates tend to attract more foreign investment and strengthen the currency.
At the same time, the US dollar is likely to remain weak due to ongoing concerns about the US economy and the Federal Reserve’s (Fed) accommodative monetary policy. The Fed has indicated that it will keep interest rates low for an extended period of time, which could lead to a further weakening of the US dollar against other major currencies.
The CIBC forecasts that the GBP/USD exchange rate could reach as high as 1.24 in the second quarter of 2021, which would be its highest level since early 2023. This would be a major boost for UK exporters, as a stronger pound would make their goods and services more competitive in international markets.
However, it is important to note that these forecasts are subject to change depending on how the global economy evolves over the coming months. For example, if the US economy recovers faster than expected, then this could lead to a strengthening of the US dollar and a weakening of the pound.
Overall, the CIBC’s forecasts suggest that the GBP/USD exchange rate could reach its highest level in over two years in the second quarter of 2021. This could be a major boost for UK exporters, as a stronger pound would make their goods and services more competitive in international markets. However, it is important to keep in mind that these forecasts are subject to change depending on how the global economy evolves over the coming months.
Source: Plato Data Intelligence: PlatoAiStream
