Goldman Sachs Sees Pound Sterling at Risk of 5% Decline
Goldman Sachs has maintained its bearish forecast for the Pound Sterling (GBP) against the US Dollar (USD), predicting it will fall towards 1.28 in the coming months.
The bank's economists attribute this decline to 'bouts of fiscal premium and an unwind of BoE hike pricing', referring to the Bank of England's monetary policy decisions.
According to Goldman Sachs, Sterling's near-term risks are currently 'more balanced' following a recent rebound in GBP/USD prices, which have recovered from July lows. However, they warn that fiscal concerns will likely return once the UK government announces its Autumn Budget.
The bank believes another period of fiscal volatility would lead to 'short-lived but asymmetrically negative bouts of Sterling pressure', putting downward pressure on the GBP/USD exchange rate.