• Bank of england raising rates later than expected
  • UK election in May 2015
  • Persistent current account and fiscal deficits

Three reasons why HSBC have taken the shears to their estimates for cable next year

They see the quid at;

  • Q1 2015 1.54 vs 1.59 prior
  • Q3 1.49 vs 1.57 prior
  • Q4 1.48 vs 1.55 prior

They also add that the spot market hasn’t priced on any political risk and that we’re not trading below the level implied by expected interest rate differentials but exclusively on a carry trade basis. They expect the first BOE hike to come in Feb 2016. They also saw cable at 1.60 at the end of this year after cutting it before the Scottish referendum in Sep

On pretty much the same outcome Morgan Stanley have also cut their GBP/USD forecasts

  • Q1 2015 1.51 vs 1.63 prior
  • Q3 1.45 vs 1.56 prior
  • Q4 1.47 vs 1.51 prior

And that folks, is why we at ForexLive don’t make price predictions further out than the end of our noses

;-)