© Adam Cole
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How do you evaluate the current performance of the British Pound versus its major counterparts?
To my mind, the Sterling has been generally outperforming most of the majors in 2014 so far. Thus, we expect this trend to continue in the remainder of the year, but the pace of the Pound's gains to moderate as markets are already priced for fairly aggressive Bank of England tightening.
What will be the major headwinds for the Sterling throughout the year of 2014?
In my view, the Scottish referendum in September is a key risk. Thereby, our main expectation is that Scotland will vote to remain as a part of the UK, and the Sterling will come through the process unscathed. However, if the opinion polls again start to show the gap is closing and the vote will be close, we expect the Pound to suffer. Moreover, other major risk is that the government uses "macro-prudential" measures to cool the housing market, and this takes the pressure off the Bank of England to raise rates.
What are your forecasts for the EUR/GBP and the GBP/USD for the end of Q2 and the end of 2014?
We anticipate 0.81 for the EUR/GBP in the second quarter and 0.80 in the end of 2014. Speaking of the greenback, we expect 1.65 in the Q2 and 1.63 for the GBP/USD for the end of this year.