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Two major investment banks raise point forecasts for the Pound against the Dollar.
Analysts at Goldman Sachs say the upgrade comes amidst a broader rerating higher for European currencies in 2025, allowing Sterling to "ride the European wave".
Crédit Agricole's says the next three months could see GBP/US hit the snooze button but, "The GBP/USD rally could resume in 6M-12M on the back of more persistent USD weakness as well as evidence of improving UK growth outlook."
The new point forecasts can be viewed here.
Goldman Sachs also thinks the Pound can outperform amidst rising U.S. tariffs. The call comes just days ahead of Donald Trump's April 02 "Liberation Day" tariffs.
"We think Sterling should benefit from a relative resilience to US tariffs, which should be increasingly important heading into the April 2nd tariff deadline," says Goldman Sachs.
Pound Sterling Live reports on Thursday, March 27, that the UK currency is performing as a tariff hedge, noting it recovered through the late Wednesday session as new tariff headlines flowed out of the White House.
Trump signed an order that will impose a 25% import tariff on all vehicle imports starting April 03.
The tariff would also apply to all vehicle components, leaving little scope for carve-outs. Trump said these tariffs were non-negotiable.
The Pound-to-Dollar exchange rate has recovered from 1.2870 to 1.2905.
According to the newly updated consensus forecast tracker at IncisiveFX, this latest move puts GBP/USD over 300 pips above the three-month target. In fact, GBP could be close to running ahead of the 12-month forecast.
Certainly, the currency pair is higher than Goldman Sachs' forecasts think is warranted, but interestingly, it is well below the Crédit Agricole prediction.
As the FX forecast tracker notes, Crédit Agricole joins Bank of America as being one of the more bullish Sterling forecasters.
Risks for GBP heading into next week are high, with some analysts warning the next set of tariffs from the U.S. could flip the Dollar reaction function from negative to positive.
It is why some investment banks like JP Morgan and Citi think the Dollar is due a comeback in the second quarter.
According to EU officials, countries in the European Union are likely to face a flat, double-digit tariff on all goods as part of the April 02 "reciprocal" tariffs.
Politico quotes three sources, said to have been briefed on talks between European trade chief Maroš Šefčovič and U.S. counterparts Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer.
The tariffs are expected to kick in at midnight on April 3.
EU ambassadors to the U.S. were also told there is little they can do to avoid the tariffs going into force, which the Trump administration views as the beginning, not the end, of trade negotiations.
Meanwhile, the UK is expected to be included, with Trump promising to target countries that charge value-added taxes.
For now, tariffs are not harming European countries, and in fact, it is the Dollar that has come under pressure.
But, given the scale of tariffs that are incoming, there is a possibility that they are severe enough to flip a switch in FX that reboots the Dollar's safe-haven credentials.
If so, Pound-Dollar faces a setback.