© Geoffrey Yu
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Throughout this year I doubt that it will be the case, since the Sterling is not going to strengthen on the back of improvements in the nation's economy alone. The Sterling's performance to a large extent will depend on the future monetary policy of the Bank of England. However, in the short term, given the fact that the UK's economy is, most probably, operating at a much better pace than it was originally expected, and there is a very limited political risk, we could see the Sterling to hold the current levels.
What actions do you expect to see from Mark Carney, next governor of Bank of England, when he takes over?
As Mark Carney has refrained from commenting on the UK's economy over the coming months, I am inclined to reserve judgment for that right now. In addition to that, we have to wait until the new remit is officially introduced after the August inflation report. We think Mr. Carney will be a relatively dovish central bank governor, but his further actions are going to depend on fundamental economic conditions. Nevertheless, we assume that Mr. Carney will spend as much time on macroprudential regulation as much as on the monetary policy.
What is your forecast for the Cable and EUR/GBP at the end of May?
Moving towards the end of May we actually still see the Cable sliding back towards 1.50 level. We think the 1.55, where we have seen the Cable recently, is the peak. As for the EUR/GBP, we expect the pair to move higher, back towards 86 and 87 levels.