Gbpusd Forecast Ubs

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Gbpusd Forecast Ubs

GBP/USD Will Jump To 1.40 By 2027 - UBS

UBS has issued a bullish forecast for GBP/USD with a target of 1.40. The bank added that the pair will reach the target by 2027.

This bullish forecast from UBS comes at a time when the GBP/USD is on the defensive. However, UBS thinks the selling pressure is only for the short-term and the long-term trend remains bullish.

Pound Is Undervalued

The bank commented that the GBP faces political risks. However, this doesn't change the fact that the GBP is undervalued. Also, the GBP is under-owned by investors around the world.

With that in mind, UBS expects the GBP/USD to rise higher and touch 1.40 by the end of 2026. In the next few months, investors can expect renewed interest in the GBP against the USD.

However, the one key risk for the GBP is UK political uncertainty. As of late, it seems no Prime Minister stays in office for long. On top of that, earlier-than-expected elections have also hurt the appeal of the GBP.

But, the political instability will not have a long-term impact on the GBP. The bank also added that the BoE's fiscal policy will remain unchanged. So, as long as the fiscal policy is not changed, the chances of GBP rising higher will increase.

The bank also expects the US Dollar to go under pressure due to the US political uncertainty. So, when it comes to political uncertainty, the USA is also in the same camp as the UK.

UBS added that the outlook for the UK economy is positive. Also, the Bank of England will continue to hold a balanced approach when it comes to interest rates.

Higher rates alone are enough to shield the economy and send the GBP higher against the USD. But one thing that could invalidate this forecast is a surprise rate hike from the US Federal Reserve.

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