© Chris Walker
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Chris Walker
Foreign Exchange Strategist at UBS
GBP
Our 3 month forecast for the cable is down to 1.50 so we are looking for more Sterling weakness against the US Dollar. To some extent it has been offset by flows from Europe to the UK pulling it off the direction. We are looking forward to the American Dollar gaining strength in the next month or so. In Europe escalate and the domestic conditions in the UK have not changed much and they are still deteriorating on the long-term basis.
I believe that the recent concerns over the UK's so-called isolation from the EU have a political reason. Over the long-term this decision might have some negative influence on the UK, and particularly if the UK politicians are not really at negotiating table when it comes to enacting major measures across Europe which do affect the UK. These are sort of longer term trends, and by longer I mean for 5-10 years. In the short-term it is not going to have too much of an impact over the next year on the financial markets which are very fast moving.
JPY
For the USD/JPY we see it staying range bound in Q1 as it has done for the last few weeks ever since the Bank of Japan intervened at the end of the last year. At the moment we have a bias moving towards 75.00 just tends to trend heavy and the US rates are not really increasing significantly. On the whole, we are not expecting anything extraordinary from this currency pair, we believe that it is going to do straight in this range.