GBP/USD Forecast Update from Morgan Stanley: "Upside Surprise" - Pound Sterling Live

What the desk is arguing

The desk frames this as a significant bullish move for GBP/USD, driven by Morgan Stanley's optimistic forecasts. The latest projection sets a bullish tone that deviates from the prevailing market sentiment, reflecting confidence in the UK economic recovery and potential rate increases by the Bank of England.

Supporting this stance, Morgan Stanley's target of 1.3800 for March and even more aggressive targets of 1.4200 and 1.4700 further out highlight their belief in substantial appreciation for the pound. This stands against a backdrop where consensus sees a more modest appreciation to 1.3450 in the same timeframe.

Where it sits in our coverage

According to our internal coverage, the current consensus for GBP/USD is 1.3450, with a range between 1.3200 and 1.3800. Some specific targets include: - jpmorgan: 1.3700 (Mar-26) - goldman: 1.3300 (Mar-26) - morganstanley: 1.3800 (Mar-26)

This Morgan Stanley view aligns with the higher end of the consensus targets, indicating a more bullish outlook compared to most banks which exhibit more caution in their targets.

How other firms see it

Firms such as morganstanley, jpmorgan, and deutschebank appear aligned with a bullish stance, setting aggressive targets of 1.3800 and above for Mar-26. Conversely, firms like citi and bnpparibas show a more bearish outlook, with targets as low as 1.3200 for Mar-26.

The trajectory of GBP/USD is closely interlinked with developments in GBP/EUR, as the relative strength of the pound could be affected by broader sentiment in European markets amid ECB actions.