Pound forecast to bounceback against dollar as Brexit fears fade
THE pound has been forecast to surge in the coming months, as Brexit fears begin to fade and investors look for value.
Pound saved by Theresa May 'conciliate' speech
Sterling has been predicted to hit 1.30 against the US dollar from its current level of around 1.24 by top investment bank UBS.
The firm's UK investment chief said his outlook on Britain's currency was positive and he saw it strengthening this year.
Geoff Yu slammed predictions that the pound would fall to 1.10 against the dollar.
He told CNBC his forecast is "completely the other way".
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Mr Yu said he believes that sterling will go "above 1.30 heading towards the year-end".
The pound is still down around 15 per cent against the dollar since Britain voted to leave the European Union (EU).
Some gloomy forecasts say the pound will stay weak until the out come from Brexit negotiations are clearer.
However, the UK economy's strong performance since the referendum could support the currency in the coming months.
Mr Yu said valuations could boost the pound.
He added: "If you look at positioning right now, if you look at how currency is behaving even in the short term, feels like the shorts they are getting no joy, they are starting to capitulate, if you look at options market and you look for safe havens around, suddenly the UK is not looking that bad."
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The view has been supported by other experts.
Fawad Razaqzada, market analyst at Forex.com, said: "I am of the view that the worst is behind us.
"I therefore still think that the cable [pound to dollar rate] is mostly likely heading higher in the weeks and months to come than fall below 1.20 again."
