On August 4, today Thursday, the GBPUSD opened at 1.1243, and temporarily reported 1.2165. UBS strategists believe that both the euro zone and the UK are likely to experience energy shortages this winter, and that UK energy spending is expected to rise further in October, exacerbating the inflation and cost of living crisis. In this case, the pound will fall to an all-time low this year.
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UBS strategists cut their fourth-quarter sterling-dollar forecast to 1.15 from 1.26. That’s almost equal to the 2020 period when the pandemic caused global market turmoil, and only slightly better than the situation in 1985. It’s a bold contrarian forecast, as most analysts expect the pound to hold steady at around $1.22 by year-end as the Bank of England hikes rates. UBS strategists believe that even if the Bank of England raises interest rates by the most in nearly 30 years, it will not bring a lasting boost to the pound.
GBP/USD
Resistance position: 1.2190/1.2210 (strong resistance in the day), 1.2270/90
Support location: 1.2100/10 days strong support), 1.2060, 1.2020
Biased to maintain yesterday’s range-bound volatility