Above: A view of the Goldman Sachs stall on the floor of the New York Stock Exchange. REUTERS/Brendan McDermid/File Photo.
Investment banks caution that the Pound is running out of steam.
Pound Sterling Live's latest survey of more than 30 of the world's biggest investment banks shows analysts are distinctly cooler on the Pound's prospects at the mid-year point than was the case just three months ago.
The survey shows the median and mean forecasts that provide a consensus estimate for the Pound to Dollar exchange rate have fallen.
We consider the median and mean forecast points to be the most accurate and credible forecasts available as they harness the wisdom of crowds. It allows those with payments to make credible and rational judgements when considering sending money.
The results of the survey are presented in our latest consensus forecast PDF, available on request.
The survey also creates a variance band by presenting the highest and lowest forecasts in the dataset. Crucially, it identifies investment banks that were accurate in predicting where Pound-Dollar would be in three months. In March's survey, the most accurate forecasters were Unicredit, RBC, NAB and CIBC, with their forecast of 1.37 for the end of the second quarter, vs. an actual close of 1.3740.
The mid-year update shows investment banks have made downward revisions for the Pound across all time horizons.
This downshift in expectations could influence timing decisions for individuals or businesses planning USD purchases, as the consensus now points to a shallower recovery profile.
A £100,000 GBP/USD transfer would have delivered $6,390 more under the March forecast conditions compared to the June forecast for the 3-month horizon, based on the mean.
To be sure, the survey shows no collapse in value of GBP/USD which is seen staying above 1.30. In March, the trajectory suggested a gradual strengthening of the Pound, but by June, expectations flattened, with no significant appreciation forecast beyond 6 months.
Reasons for the shift in events are covered in detail on the pages of Pound Sterling Live, and include the general cooling in the UK economy and fears about the country's long-term financial position.
The Dollar has meanwhile adjusted to the Trump era, and there is some uncertainty as to what comes next. For sure, the thrust of USD weakness of recent months has subsided.
As always, what comes next is uncertain, but consensus forecasts can provide a valuable anchor amidst the cross currents of international FX.
Request your download of the consensus forecast document here.