Concerns over the UK election are forgotten and the pound has become a favorite currency of foreign-exchange strategists. Analysts forecast that the pound will advance against the euro; moreover, some of them suppose that it will be the biggest rise for the last seven years. According to the reviews, the pair’s price may touch the score of 70 pence per 1 euro. The UK election did not bring any changes, that is why the market is focused on the Bank of England’s actions. Although, the regulator does not give any information on the key interest rate change, the market participants expect its hike. Economists at BNP Paribas, using the latest macroeconomic data, suppose that the benchmark interest rate can be raised as early as February 2016. Morgan Stanley analysts share their colleagues’ opinion and recommend a long position against the euro. At the same time, UBS recommends traders to sell the Australian dollar versus the pound.
Weak demand in the eurozone, which is considered to be the UK’s main trading partner, has a considerably negative influence on the British exports.
The Bank of England announced that improvement in the eurozone economy could have stimulated the Bank of England to meet its target inflation rate of 2%. In the recent months, the strong pound led to a sharp decline in the inflation rate.
