Will the pound hit $1.40 amid soaring optimism?

The pound could hit a peak of $1.40 by March next year, bolstered by a more promising economic outlook and the prospects of political stability, predicts Nigel Green

 
The bullish prediction from deVere Group’s CEO comes as major financial institutions rush into the UK’s currency, which is currently around $1.29.

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He says: “The recent landslide win appears to have reignited confidence in the UK’s economic future, encouraging investors and driving positive sentiment across the markets.

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“Labour’s decisive victory has created a stable political environment, essential for promoting economic growth and attracting investment.

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“The new government is seen as poised to implement policies that promote fiscal responsibility and economic development.

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“This newfound political stability is a stark contrast to the turbulence seen in the United States, where the upcoming presidential election is creating uncertainty, and in France, which is grappling with ongoing political crises, affecting the euro.”

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One of the key factors supporting the pound’s bullish trajectory is the Bank of England’s monetary policy.

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Unlike other central banks that are aggressively cutting interest rates, the Bank of England is expected to take a more measured approach.

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“The anticipation that the Bank of England will cut interest rates less sharply than its counterparts has already had a positive impact on sterling, setting it on course for its best month since November.”

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Since the start of the year, the pound has appreciated nearly 1.5%, outperforming all Group-of-10 peers against the dollar.

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“We are optimistic that this trend will continue, and believe that should the momentum continue, the pound could reach a peak of $1.40 by March next year,” says Nigel Green.

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Against the euro, the pound has also demonstrated remarkable strength, trading at its highest levels since August 2022.

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The deVere CEO concludes: “The confluence of a few different factors – Labour’s landslide, the Bank of England’s caution of cutting rates, and political uncertainty elsewhere, among others – is driving positive sentiment on the pound.

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“A growing number of investors are likely to pile in, further pushing the currency’s value in the near term.”