The US dollar will gain broadly against the euro and sterling over the next 12 months, according to the most accurate forecaster in the September Reuters foreign exchange poll. Howard Archer, chief European and UK economist at IHS Global Insight gave the most accurate one-month dollar rates for sterling, the euro and yen in the September currency poll.
"I would expect the dollar to improve a bit. The economic fundamentals for the US do still look better than the eurozone. So we think that the dollar weakness has been overdone," he said.
The latest Reuters poll found that the euro is set to lose its recent strength over coming months as the United States gets past another bout of political wrangling and as the euro zone's growth prospects remain weaker by comparison.
Archer expects sterling to remain buoyed by expectations the Bank of England will need to raise interest rates long before its forward guidance suggests as Britain's economic recovery becomes entrenched and more broad-based.
"We certainly have become more optimistic on our UK growth forecasts and we also think the Bank of England will end up raising interest rates well before 2016," Archer said.
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