UBS is optimistic about the British pound’s future, pointing to recent statements by the UK’s new Chancellor, Rachel Reeves, regarding the government’s focus on growth. Reeves highlighted the importance of supply-side reforms to boost investment and stimulate economic expansion, rather than increasing government spending.
UBS emphasized the stability of the UK’s political environment, noting that it is the most stable among G7 nations over the next five years. This stability is expected to attract investments to the British pound, leading to a positive shift in the currency post-Brexit.
The brokerage firm maintains its target exchange rate for the British pound at 0.8400, anticipating a strengthening of the currency against the euro. UBS believes that the combination of political stability and the government’s commitment to reforms could encourage increased investment and support economic growth.
Overall, UBS’s outlook suggests a scenario where the British pound appreciates against the euro, potentially reaching the 0.8400 level in the future. This would signify a significant increase in the pound’s value compared to its European counterpart.