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Bank forecasts point to a gradual pound-to-euro decline, but outliers suggest a surprise could be coming.
We have surveyed the world's leading investment banks to see where they expect the pound-to-euro exchange rate to end up in the coming quarters.
The headline takeaway is that tier-one investment banks expect a steady depreciation: nothing spectacular but a depreciation nevertheless.
Pound Sterling Live polls the investment banks to see the highest and lowest forecast targets, but it is the mean forecast that we derive from the dataset which we think is the most important for those with upcoming payments to consider.
That's because the mean can be considered the most accurate and credible forecast available; after all, it is the sum of numerous models and the thinking of the best minds in the game. The data is available on request from our partners at Horizon Currency.
The most bullish forecast for the coming quarters is derived by Bank of America, while the likes of Commerzbank and UniCredit maintain a bearish view.
The consensus estimate implies a gradual decline from current levels of spot over the coming quarters, meaning those with outgoing euro payments might be best served by locking in current rates with their provider for future payments.
However, the mean estimates look relatively contained relative to current levels and are in keeping with a multi-week consolidative action in pound-euro. Our technical week ahead forecasts think that the market is ready to break out and start trending again.
If that's the case, then it could be the outliers in the survey that are worth watching: could this be when the consensus is proven wrong?
We think the odds of that happening are high because we are entering an interesting period: the war in Iran has pushed higher global energy prices and this will impact some economies harder than others.
That surprise will shift the exchange rate markets and deliver some welcome volatility in many exchange rates, and we're hoping that includes GBP/EUR too.
Request your document showing the consensus point forecasts from leading international banks.