Synopsis:

Credit Agricole projects that the British Pound (GBP) will generally outperform the Euro (EUR) over the coming years, with targeted movements in major currency pairs. The bank outlines its expectations for GBP/USD and EUR/GBP into late 2024 and throughout 2025.

Key Points:

• EUR/GBP Forecast: Credit Agricole targets a decline to 0.84 by Q4 2024, with further pressure expected in 2025, bringing the pair down to 0.83.
• GBP/USD Forecast: They anticipate that GBP/USD will reach 1.25 by the end of 2024, affected by domestic factors and heightened US political and global geopolitical risks. In 2025, the pair is expected to rise to 1.35, aligning with a broader USD downtrend.
• Factors Influencing GBP: The forecast is underpinned by a mix of domestic economic developments in the UK and broader international dynamics, including US political risks which might negatively impact GBP/USD in the short term but support a recovery later on.

Conclusion:

While near-term challenges might suppress GBP/USD, Credit Agricole remains optimistic about the long-term trajectory of the pound against both the USD and EUR. The bank expects significant GBP appreciation by 2025 as it aligns with a forecasted general downtrend in the USD.