Pound to recover losses against dollar but analyst estimates slashed

The British pound will have recovered its losses against the dollar in a year. However, analyst forecasts a month ago were cut as the coronavirus continues to create chaos. 

The pound declined in recent weeks as concerns about the pandemic’s impact on the economy drove investors to safer currencies and to liquidize assets in exchange for dollars.

The pound hit a 35-year low on March 20.

The GBP/USD currency pair traded at $1.24 on Thursday. According to forex analysts, the pair will slip to $1.22 in a month, but will recover to $1.25 in six months. In a year, it will have recovered by 4%, at $1.29.

Once the virus is contained and lockdowns ease in the second half of the second quarter, the British pound will see gains against the dollar, MUFG said.

However, the recent declines of the pound retracted analyst forecasts made a month ago. The pound’s most recent decline was its steepest fall since Britain voted out of the European Union in 2016.

The 12-month forecast for the pound highlighted uncertainties for the currency, ranging from $1.13 to $ 1.41.

The Bank of England has also eased their monetary policy and made two emergency rate cuts. The bank increased its bond purchases in order to combat a coronavirus-led shutdown that could lead Britain into a long recession.