The UK economy has now fully reopened and although GDP has not yet returned to pre-crisis levels, the recovery is well underway. In the opinion of economists at Danske Bank, sterling could strengthen further but at a slower pace than at the start of 2021.
Stronger pound in the coming months
“We continue to expect the GBP to strengthen, although at a more moderate pace than at the start of 2021.”
“The UK economy appears to be growing faster than the eurozone, the Bank of England has come closer to the start of the hiking cycle and sterling is set to benefit from general investment sentiment, with the USD strengthening on Fed policy tightening and a peaking industrial cycle.”
“Sterling would be exposed to a scenario of growing market pessimism and/or the UK economy underperforming expectations.”
“Increasing political EU-UK tensions over the Northern Ireland protocol could also weaken the GBP – and so could a second referendum on Scottish independence.”
“Forecast: 0.85 (1M), 0.84 (3M), 0.84 (6M), 0.83 (12M), 0.83 (end-2022).”
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