UBS Predicts GBP/USD to Rise as Federal Reserve Eases While Bank of England Takes Gradual Path
Investing.com - In a recent note, UBS analysts highlighted the divergence in easing paths between the Federal Reserve and the Bank of England. The Fed has already started its easing cycle with a 50 basis-point cut, with more cuts expected through 2025. On the other hand, the Bank of England is anticipated to take a more gradual approach due to stickier inflation.
Currently, GBP/USD is up 1.3% over the past week, trading at 1.3382. UBS expects the Fed to cut rates more forcefully in the coming months compared to the Bank of England, potentially reducing the USD's yield advantage. This could lead to a fade in USD overvaluation in the near future.
Despite possible short-term setbacks, UBS forecasts a rise in the GBP/USD pair to 1.38 by the end of September 2025. This shift in monetary policies could have significant implications for currency traders and investors, impacting their strategies and portfolios. It is important to stay informed and adapt to changing market conditions to make informed decisions about their finances.