UBS: GBP/USD to trade around 1.28 and EUR/GBP around 0.90 in 3M

Union Bank of Switzerland’s CIO is expecting the GBP/USD pair to trade around 1.28 and EUR/GBP cross to trade around 0.90 over the next three months.

Key Quotes

“Given wide range of Brexit outcomes, we think the risks around those forecasts are more important than the numbers themselves.”

“In a hard Brexit scenario, CIO forecast GBP/USD could fall to 1.15 and EUR/GBP rise to close to 1. Even in a less bad scenario during the run-up to a general election or second referendum, GBP could still drop from current levels.”

“However, CIO would also caution against outright selling the pound beyond a few weeks' time. The currency remains undervalued on purchasing power parity terms, which makes it an unattractive sell over a multi-year horizon.”

“Instead, looking for long-term investment opportunities at GBP/USD levels of 1.24 and below should be the preferable long-term strategy.”