Sterling is set to fall further against the dollar in the medium to long term due to the uncertainty following the U.K.’s vote to leave the European Union. In fact, the currency is expected to hit $1.25 sooner than later, a number of analysts told CNBC.
“I have a 1.25 forecast for GBP/USD over the next three months. If the data remains weak, that forecast risks being revised further lower,” Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets told CNBC via email.
“The recalibration of macro assumptions post-Brexit has yet to force the Bank of England to forecast annual negative growth. However, the scale of the immediate growth revisions has prompted an aggressive policy response, in large part as the bank attempts to get ahead of what is expected to be increasingly weak real economy data.”
Stretch explained that if the data confirm the worst fears, then the BOE will again swing into action in November — which could lead to a further revision of sterling.