The pound will cruise along against the dollar as uncertainty about an economic rebound and future fiscal policy in the UK are offset by a strengthening risk appetite, a Reuters poll found on Wednesday (December 2). The monthly poll of over 60 analysts, taken this week, saw the pound at $1.65 in one month, little changed from the $1.66 it was trading at earlier on Wednesday but up from the $1.62 predicted last month.
Median forecasts saw cable holding at $1.65 in six months and not moving from there for a further six. This compares to a six-month $1.64 and one-year $1.65 forecast in November's poll. "Expectations of strengthening UK GDP growth in Q4 and a pause in quantitative easing are likely to keep GBP/USD supported in the medium term," said Kenneth Broux at Lloyds TSB Capital Markets.
The Bank of England has slashed interest rates to an historic low of just 0.5 percent and is expected to hold them there well into next year. It also has been injecting billions of pounds directly into the money supply through its quantitative easing programme to try and kick-start the economy.
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