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However, Pound forecast to lose ground to Euro.
A new update from Morgan Stanley suggests there is ample scope for further Pound-to-Dollar upside.
In a new strategy note, Morgan Stanley analysts say "GBP/USD has scope to rise, but its pace is unlikely to match that of EUR/USD, which should keep EUR/GBP rising towards 0.86."
A move in EUR/GBP to 0.86 would equate to a move in GBP/EUR to 1.1630.
Analysts say the British Pound should benefit from "its relatively high scores on liquidity and safety and investors generally view the UK as less likely to be the locus of trade tensions versus other countries."
However, a near-term risk for the Pound is the Bank of England which could pivot to being more 'dovish', i.e. inclined to cut interest rates at faster pace then previously indicated.
"Carry remains an important factor for GBP's success, and a dovish pivot from the BoE this week could prove a temporary setback," warns Morgan Stanley.
Carry describes the buying of assets with high interest rates at the expense of those with lower interest rate assets. This creates a flow of capital that naturally bids the recipient currency.
The UK's high interest rates ensure the Pound is a beneficiary of the carry trade. Cutting interest rates faster would diminish that advantage.
The Bank could be set to speed up the pace it cuts in order to provide insurance against an economic slowdown related to U.S. President Donald Trump's global trade war.
However, most economists don't think the Bank of England will be able to accelerate its rate cuts to the degree that the Pound's carry advantage is entirely eroded, owing to elevated domestic inflation.
"We think dips would be bought and, should EUR/USD reach our 1.20 target, in that world we think GBP/USD is likely trading around 1.40," says Morgan Stanley.