The pound sterling has reached a three-year high, trading at $1.36. However, experts point to underlying unstable factors affecting the currency.
Current situation of the pound sterling
The pound sterling is currently trading at $1.36, reflecting an 8.7% increase against the US dollar since the beginning of the year. Nevertheless, against the euro, it has weakened by 2.9%, reaching 1.173 euros, raising questions about its real strength.
Connection with the dollar and the US economy
According to Janet Mui of RBC Brewin Dolphin, the surge in the pound is largely due to the weakness of the dollar. 'The relative strength of the pound has been more about a weak US dollar story this year,' she commented. The situation is complicated by issues stemming from President Donald Trump’s trade policies, which are diminishing confidence in American assets.
Outlook and forecasts
Experts expect that the pound's situation may remain uncertain in the short term. Paul Jackson of Invesco believes the pound could rise to 1.40 in the next 12 months, though it may drop to 1.15 against the euro. Negative economic data from the UK and potential rate cuts by the Bank of England could put pressure on the pound. Investment manager Brian Mangwiro provided a more pessimistic forecast, anticipating the pound could fall to 1.30 against the dollar and 0.875 against the euro within the next six months.
Thus, while the pound sterling is currently strengthening, experts highlight several factors that could lead to its instability in the future.
