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FX BANK FORECAST · COVERAGE
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Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 37 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 37 institutional desks. No promotion.
The desk maintains a bullish outlook on GBP as positioning shifts occur amidst a weakened USD landscape, driven by easing inflation pressures. Per the full note from ing-think, the ongoing unwinding of GBP shorts, alongside political changes such as Shabana Mahmood's potential role as chancellor, has contributed to the pound’s recent strength. Despite the dollar's soft PPI print showing a -0.3% month-over-month change, the overall market sentiment suggests limited further downside for the USD, particularly given geopolitical tensions points to higher volatility. The current consensus for GBP indicates a target of 1.3500, affirming its upward trajectory against the backdrop of diverging central bank policies.
The desk frames this as a compelling GBP bullish scenario as significant short positions are being unwound in the currency. Recent positioning changes have resulted in sterling emerging as a key outperformer, with supportive factors including the political landscape and discouraging economic prints from the USD. Frantisek Taborsky and Francesco Pesole highlighted that political appointments could subtly bolster confidence in GBP, underscoring the currency's resilience.
Supporting this bullish view, the desk notes the dollar remains pressured after disappointing PPI and CPI data showed only muted inflationary pressures, with a core PPI print at just 0.2% month-over-month. The expectation is that the Fed will likely pause its hiking cycle unless a clearer disinflationary trend solidifies, which means tactical shifts in USD positions are essential to monitor going forward.
Our current consensus for GBP places it at 1.3500, with a range mostly bounding around 1.2400 to 1.3800 based on several institutional outlooks. Key targets from notable firms include: - Goldman: Mar26 1.3300, Jun26 1.3500, Dec26 1.3600 - Scotiabank: Mar26 1.3607, Jun26 1.3738, Dec26 1.3800 - JPMorgan: Mar26 1.3700, Jun26 1.4100, Dec26 1.3600
This outlook is in line with cross-firm expectations which show a strong consensus around GBP's current price level for March 2026, with most firms projecting slight upward movement relative to the current spot. Notably, BOFA stands out with a more conservative target of 1.3400 for Mar26, positioning it on the lower end of the spectrum.
A number of firms are aligned with our bullish GBP stance, including Goldman and JPMorgan, both anticipating appreciable gains over the coming months. Conversely, firms such as Citi show a more cautious approach, projecting lower targets that might not align with current bullish sentiments. This divergence reflects varying assessments of inflation dynamics and geopolitical influences.
Related currency pairs to keep an eye on include EUR/GBP, given the ongoing divergence in monetary policies influenced by ECB rates, as well as the USD/JPY, which will react alongside the Fed's decisions and broader dollar movements.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
Market implications
Traders should watch the upcoming U.S. retail sales data, set to be released soon, as it will provide further insights into consumer sentiment and potential impacts on the Fed's monetary policy. The level of 1.3500 for GBP/USD is critical, as any sustained breach could amplify bullish sentiment and target higher ranges above this threshold.
Risks to this view
The main risk to this bullish GBP outlook could stem from a sharp reversal in U.S. inflation data indicating sudden price pressures, which might prompt a more aggressive Fed policy response. Additionally, any escalation in geopolitical tensions could derail risk sentiment, adversely impacting GBP.
| Firm | Stance | YE 2026 |
|---|---|---|
BNP Paribas | Bearish | 1.1500 |
UBS | Bullish | 1.1800 |
UOB | Bullish | 1.1800 |
All 30 desk targets for EUR/USD
Articles FX Daily: The big GBP short unwinding continues Published 07:30 FX Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download The dollar stayed under pressure as PPI confirmed that inflation pressure eased in June. Still, with the Gulf situation apparently far from de-escalation, we don’t see much more USD downside potential in the near term. Instead, sterling is emerging as a major outperformer on the back of further positioning adjustments Frantisek Taborsky , Francesco Pesole and Chris Turner News that Shabana Mahmood could become Andy Burnham’s chancellor has boosted the pound USD: Losing more ground The dollar has remained under pressure, with FX volatility resuming its decline after a short-lived bounce earlier this week.
Brent settling at around $85/bl is seemingly not enough to drive inflation expectations much higher, and the USD front-end continues to feel some gravitational pull from soft June CPI data. PPI was also rather muted yesterday: -0.3% MoM for headline, 0.2% MoM for core. At the same time, the two-day testimony by Fed Chair Kevin Warsh and a speech by Chris Waller are warning markets against reading too much into one single inflation print.
According to Waller, the disinflationary trend must be visible over a few months to call off hikes. Hardly a guarantee now that oil prices have risen again. All in all, markets may remain content with one Fed hike priced in this year.
As some other central bank pricing catches up on the upside, the dollar might still be inching lower in most crosses. US retail sales for June are published today, and are expected to grow at 0.2% MoM after four very strong months. The Fed’s Logan and Schmid (both hawks) are scheduled to speak.
Francesco Pesole EUR: Rally should lose steam We aren't convinced this EUR/USD rally has much further to run, barring clear signs of a de-escalation in the Middle East. The rise in gas prices (more impactful for the eurozone's terms of trade than crude) should prevent the euro from building any idiosyncratic narrative at this point. We expect EUR/USD sellers to emerge around the 1.1500 area, and see a greater chance of rangebound stabilisation at this stage rather than a break higher.
The eurozone calendar is empty today, with the ECB entering its pre-meeting quiet period. Francesco Pesole GBP: Shorts on the run The sterling short squeeze continues. The catalyst for EUR/GBP to break below 0.8500 yesterday was reports that Shabana Mahmood would be Andy Burnham’s pick for chancellor when he likely comes to power next week.
Mahmood is seen to the right of the Labour Party and a less divisive – and potentially less fiscally expansive – candidate for chancellor than Ed Miliband. 10-year UK gilts outperformed German Bunds by around 5bp yesterday. The strength of the sterling rally looks more a function of position adjustment rather than a massive re-assessment of the prospects for UK PLC, however. Positioning data from US futures exchanges had recently shown speculators running the shortest sterling positions since 2017.
It may be difficult to stand in the way of the sterling rally in the short term, where a sustained break of 0.8470 opens up 0.8400 for EUR/GBP, while GBP/USD could make a run at 1.3600/3650. And next week looks a big one for UK inputs, with Burnham taking the reins and both CPI and jobs data released. Yet when position-adjustment activity fades and investors return to the UK macro/Bank of England story, EUR/GBP should be able to retest the recent break-out area around 0.8600/8610.
That may be a story for much later this month. Chris Turner CEE: Stabilisation should bring buyers back to region The CEE region remains in the grip of global events, with a dovish shift in Fed pricing on one hand and still elevated oil prices on the other. We may see some relief in the region for the second day in a row, but the risks are not changing much for now.
However, the worst of the US-Iran escalation now appears to be behind us, barring any fresh developments. This could attract more interest in CEE FX in the event of another day of stability and take advantage of cheaper levels, especially in the Hungarian forint, which remains at the upper edge of our 350-360 EUR/HUF range. Today's data in the region has little chance of changing anything with the dominant global story.
In Hungary, wages for May will be published, which remain elevated and the highest within the CEE region, and at the same time, one of the few upside risks for the inflation profile. In Poland, core inflation will be published for June. Yesterday's final figures confirmed headline inflation at 2.5%.
Core, according to our estimates, fell from 3.1% in May to 3.0%. Frantisek Taborsky GBP CEE FX Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Authors Frantisek Taborsky EMEA FX & FI Strategist Frantisek is an FX & FI Strategist covering EMEA markets, having joined the bank in 2022. He provides short- and medium-term recommendations for ING's corporate and institutional client… Francesco Pesole FX Strategist Francesco is an FX Strategist and has been with the firm since May 2019. His main focus is on the G10 space and, in particular, on European and commodity currencies.
He began his career at Credit… Chris Turner Global Head of Markets and Regional Head of Research for UK & CEE Chris is Global Head of Markets and Regional Head of Research for UK & CEE. Together with his team, he provides short and medium-term FX recommendations for ING's corporate and… In this article USD: Losing more ground EUR: Rally should lose steam GBP: Shorts on the run CEE: Stabilisation should bring buyers back to region
How we cover this story
Fed hawkishness creating fresh EUR/USD selling pressure suggests market repricing higher-for-longer USD rates relative to ECB policy trajectory.
Rising yields supporting USD strength; EUR/USD trading below 1.15 suggests market repricing of relative rate differentials favors dollar appreciation.
Hawkish Fed guidance supports USD strength and widens rate differential favoring dollar positioning into week-end.
Cable trades 1.51% below the 20-firm median Dec-26 target of 1.36, with a 0.26-point spread from Citi's 1.24 floor to UBS's 1.50 ceiling.
Cable trades 1.51% below the 20-firm median Dec-26 target of 1.36, with a 0.26-point dispersion signalling deep disagreement on the BoE-Fed divergence trade.
EUR/USD trades 1.69% below the 30-firm median Dec-26 target of 1.1684, with a 0.14 range separating Nordea's 1.24 bull case from Citi's 1.10 floor.
30 investment banks see EUR/USD at 1.1639 by Dec 2026
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