In its latest update to clients, the UK lender upped its forecast for the pound with its latest calculations suggesting GBP could reach as high as €1.18 versus the euro by the end of 2019. The UK currency had been stuck in the €1.15-region through much of April but smashed through €1.16 this week after reports suggested the tone of Brexit talks between the Government and Labour had improved. At 8.57am UK time today, the pound is trading at €1.1661 against the euro. Versus the US dollar, Sterling was worth $1.3077 at the same time of writing.
As quoted on currency watch website Pound Sterling Live, Lloyds Bank said: “With major economic and political forces pulling the currency pair in opposing directions, we see little reason for GBP-EUR to decisively break its post EU referendum range of 1.10-1.20.”
The bank’s latest pound prediction is under assumption of Britain agreeing a deal with the European Union ahead of the deadline on 31 October, 2019.
In previous forecasts issued to clients in January, the UK lender suggested the pound euro exchange rate could end 2019 as low as €1.08 should a no deal Brexit take place.
Lloyds Bank said its latest pound prediction is under assumption of Britain agreeing a deal with the European Union ahead of the deadline on 31 October, 2019.
However, the bank remained nervous about political uncertainty in the coming months and said Sterling is likely to remain volatile until Brexit is clearer.
The lender said: “All options, ranging from a ‘no deal’ exit to a ‘confirmatory’ referendum or revocation of Article 50, remain in play.”
Pound traders will be keeping a firm eye on the Bank of England interest rate report today, due out at 12pm UK time.
Analysts have suggested Sterling could rise should policy-makers hint at a 2019 interest rate rise.
This is due to better-than-expected economic growth, rising inflation risks, and reduced no-deal Brexit risks.
But for now, it is expected that rates will be held for at 0.75 percent, partly because of Brexit hanging over Parliament.
Bank governor Mark Carney will also give a press conference after the documents are published at 12pm UK time.
Connor Campbell, analyst at Spreadex, said: “This makes the latest set of economic forecasts the more interesting part of the session, alongside Carney’s comments post-meeting.”