Dollar Will Struggle into Year-end: UBS - Pound Sterling Live

What the desk is arguing

UBS forecasts that the U.S. dollar will struggle to maintain its strength as year-end approaches, citing a confluence of factors that may dampen demand for the currency. Market volatility is expected to increase, coupled with potential shifts in Federal Reserve policy, which could undermine the dollar's appeal.

Furthermore, UBS suggests that if inflation moderates and economic growth shows signs of slowing, the dollar could weaken even further against its peers. This outlook implies that investors should prepare for a potential decline in dollar valuation as we approach the new year, rejecting the notion of sustained strength backed by current economic indicators.

Where it sits in our coverage

Our current consensus target for the dollar aligns with UBS's perspective, projecting a midpoint of 1.075 against a euro range of 1.04 to 1.12. This indicates a bearish stance on the dollar as we anticipate a softer economic backdrop influencing FX markets through year-end.

Specific firm targets within our coverage reflect a similar bearish sentiment:

• JPMorgan: 1.10 (Mar26)
• Barclays: 1.08 (Mar26)
• Goldman Sachs: 1.07 (Mar26)

How other firms see it

Some firms have aligned their views with UBS regarding the impending dollar weakness. For instance, Goldman Sachs and Barclays share similar targets that reflect expectations of declines.

However, there are also contrary stances represented by firms such as BofA, which remains more optimistic about the dollar, projecting a lower target than others. Key contrary views include:

• BofA: 1.04 (Mar26)