MUFG forecast GBP underperformance, say the Bank of England has overdone tightening

MUFG are of the view that the BoE has already tightened monetary policy too much and that there is thus the potential for UK rates to ‘soften’ in comparison to other developed market economies.

MUFG project GBP to underperform from now, and add that in the case of a weakening USD this underperformance will be more evident against the EUR.

GBP/USD projections for the year ahead are not lower:

  • Q4 2023: 1.2150
  • Q1 2024: 1.2570
  • Q2 2024: 1.2730
  • Q3 2024: 1.2660

EUR/GBP, same

  • Q4 2023: 0.8600
  • Q1 2024: 0.8750
  • Q2 2024: 0.8800
  • Q3 2024: 0.8850

This article was written by Eamonn Sheridan at Source