© Geoffrey Yu
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Despite the weakness in PMI figures, we do not expect any major downgrade of UK growth, as fundamentally the economy is still moving in the right direction. We target growth of 2.6% and 2.8% in 2015 and 2016, respectively. The UK economy will continue to outpace that of the Euro zone by a wide margin in these years, even if the peak of out-performance may be passing.
Although companies continued to profit from strong domestic demand, their representatives are still increasingly concerned over Europe's cooling economy and the potentially damaging effects of debate over Britain's EU membership. In your opinion, what effect this will have on Britain's economy?
The fact that companies are maintaining their investment and hiring plans shows that they have a certain optimism about prospects ahead. Manufacturers want the government to increase funding and strengthen its support for innovation by ensuring the business environment for companies, which are planning to invest, recruit and get into new markets. However, if the UK votes to leave the EU, then there will be an adverse effect. However, much will depend on the outcome of the election and we take no position until the results come out in May.
What will be the major drivers for the Pound in the beginning of the upcoming year?
First of all, we are sure that the first driver will be interest rate expectations. The second factor that could determine the Pound performance could be the situation with the global policy, especially what happens after the ECB begins QE program. Finally, we are sure the situation in politics will have an impact on British currency as well.
What are your forecasts for GBP/USD, EUR/GBP for the longer term prospective?
We forecast the GBP/USD to see around 1.53 and the EUR/GBP to be at about 0.75 by the end of 2015. Talking about longer term prospective, we expect the GBP/USD to be at 1.47 levels and the EUR/GBP to be around 0.75 by the end of 2016.