In the space of a couple of months, sterling’s post-Brexit referendum slump to 30-year lows has been followed by a rally – and some analysts think that the U.K.’s currency will continue to build its strength.
Banks including Italy’s Unicredit are closing their short positions in sterling, sending the currency up 4 percent from its August low. Economists, seeing the rash of positive data on the U.K. economy restoring confidence that a recession is not yet imminent, are rushing to upgrade some of the gloomier forecasts for the 2016-17 period.
Manufacturing, services, consumer spending and construction data within the last week all suggested that the U.K. would stave off the recession many economists warned of for a few months at least – especially after the Bank of England stepped in with a ramped-up stimulus program.. Economists at Credit Suisse hiked their forecasts for UK growth in 2017 to 0.5 percent, compared to the previous forecast that the economy would shrink by 1 percent next year, on Tuesday.
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