Sterling Faces Up to 5% Decline in Goldman Sachs Forecast

Goldman Sachs has expressed its expectation that the Pound Sterling will weaken against the US Dollar in the year ahead, potentially falling to 1.28.

The bank's forecast is based on UK fiscal risks and relatively high Bank of England pricing, which they believe will leave the Pound vulnerable to further decline.

According to Goldman Sachs, the current exchange rate of around 1.3446 has been driven by broad Dollar weakness rather than any significant improvement in Sterling's performance.

The bank notes that while near-term risks have become 'more balanced' following a recent rebound, bigger concerns lie ahead, particularly with regards to fiscal policy and the upcoming Autumn Budget.