UPDATES ON GBPUSD

The British pound held above $1.35 in early January, the strongest in nearly two months and recovering from an over one-year low of below $1.32 hit on December 20th, as the UK government avoided imposing further coronavirus restrictions at the end of the year and as the Bank of England surprised investors in December by hiking interest rates from record-low levels. In addition, markets have priced in up to four BoE hikes next year. Sterling lost 1.1% against the US dollar in 2021, as concerns about the UK's economic recovery were exacerbated by a surge in energy prices, record rises in COVID-19 cases and post-Brexit tensions over the Northern Ireland protocol.

The British Pound is expected to trade at 1.33 by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 1.30 in 12 months time.