UBS, a leading global financial institution, has released an optimistic forecast for the GBP/USD exchange rate, predicting a significant rise for the British Pound against the US Dollar in the coming months. According to their latest analysis, the pair could move towards 1.38 by the end of 2025, driven by evolving economic conditions in the UK and the US.
The forecast comes amid signs of a softening UK labor market, with recent data showing an increase in jobless claims and the highest unemployment rate since the pandemic. This could influence the Bank of England to adopt a more dovish stance on monetary policy, potentially impacting the Pound's trajectory in the short term.
On the other side of the Atlantic, the US Dollar faces pressures from geopolitical uncertainties and domestic economic indicators. UBS analysts note that factors such as the upcoming US CPI data release and trade tensions could weigh on the Dollar, providing an opportunity for the Pound to gain ground.
UBS also highlights that the UK economy might benefit from improved trade agreements and a stabilizing post-Brexit environment, which could bolster investor confidence in the Pound. However, they caution that any unexpected shifts in global risk sentiment could disrupt this upward trend.
Market participants are advised to closely monitor key economic events, including central bank decisions and geopolitical developments, as these will play a critical role in shaping the GBP/USD pair in the near future. UBS remains cautiously optimistic, emphasizing the potential for volatility.
For now, traders and investors are recalibrating their strategies based on this forecast, with many eyeing the 1.38 level as a key target for the Pound. As the economic landscape evolves, UBS's insights will likely remain a focal point for currency markets.
Maria Lourdes
