BofA Sees Sterling Strengthen Against USD in Long Term

Bank of America (BofA) forecasts that the British Pound will strengthen against the US Dollar in the long term. According to their latest analysis, the GBP/USD exchange rate will reach 1.37 by the end of this year and 1.45 by the end of next year.

The bank's forecast path is somewhat cautious, with a short-term dip to 1.32 before rebounding back to 1.37. This near-term weakness is attributed to US real rates remaining elevated and the anticipation of three Federal Reserve hikes.

BofA's broader dollar view also supports their GBP/USD forecast. They expect a firmer Dollar in the second half of next year, driven by continued high US real rates and future Fed rate hikes.