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Foreign exchange forecasters were today starkly divided over the future direction of the pound following this week's huge rally.
The pound surged yesterday, spurred by new optimism over the economy which came from robust manufacturing figures and the strong performance of Barclays and HSBC.
The currency made further gains today, at one stage topping $1.70 before steadying at $1.6932, despite evidence that the construction industry is still in recession.
Foreign exchange analyst David Clements at Caxton FX said: “Over the medium term we forecast sterling will continue to gain against the greenback, particularly if banks and blue chips show renewed strength.”
However, others dismissed the rally, warning the current increase in output from factories is a short-term rebound after the huge shutdown of production in the spring – when companies ran down inventories amid economic uncertainty.
Hans Redeker, global head of foreign exchange strategy at BNP Paribas in London, said: “I am very wary of those now taking their sterling forecasts to the moon. The market is getting carried away.
“I would be seeing cable (pound-dollar) below $1.60, possibly in the low $1.50s in six months' time.”
Reader views (1)
What chances are there of a return to a $2 pound and should we join the euro when the pound is on a high against it? It might be out last chance!!!
- Melvyn Windebank, Canvey Island, Essex, 04/08/2009 14:19
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