New Goldman Sachs post Brexit forecasts


28 June, AtoZForex The decision of 51.9% Britons to leave the EU changed Goldman Sachs forecast for GBPUSD, EURUSD, and EURGBP. From macro front, Brexit has the largest economic implications on UK economy, European economy, and less for the US which is further away. Therefore, new Goldman Sachs post Brexit forecasts were changed accordingly.

New Goldman Sachs post Brexit forecasts

In this post Brexit forecast, Goldman Sachs corrects its outlook for the British Pound substantially lower, and expect further depreciation against the Euro in coming years.

Goldman Sachs EURGBP forecast

“Our new forecast for EURGBP is 0.85, 0.82 and 0.78 in 3, 6 and 12 months (from 0.76, 0.74 and 0.70 before), reflecting a weaker outlook for Sterling over the coming year,” Goldman Sachs projected.

In the medium term, the investment bank thinks the Pound will regain some strength, with EURGBP falling to 0.70 on a 2-year horizon, against 0.65 forecast in Goldman Sachs previous EURGBP outlook. And then to 0.65 on a 3-year horizon.

Goldman Sachs EURUSD forecast

Goldman Sachs is keeping its EURUSD forecast unchanged for now, but as it argued in the run-up to the UK referendum, the bank believes that the “leave” vote is a material negative shock to the Euro zone economy, which reflated itself even before the turn of events.

“Our existing forecast of 1.12, 1.10 and 1.05 in 3, 6 and 12 months therefore has clear downside risk, once the near-term bid for the Euro as a result of risk aversion – for which there was clear evidence on Friday – abates,” Goldman Sachs noted.

The risk is now that we can reach Goldman Sachs 2-year forecast of 0.95 and 3-year forecast of 0.90 a lot sooner, in particular if the doves on the ECB Governing Council turn once again to more proactive easing.

Goldman Sahcs GBPUSD forecast

Goldman Sahcs GBPUSD forecast, given its for now unchanged EURUSD forecast, “is therefore 1.32, 1.34 and 1.35 on a 3-, 6- and 12-month horizon, with our 24- and 36-month forecasts being 1.36 and 1.38, respectively.”

On a different note, losses in major US bank shares warn of a financial crisis. Morgan Stanley fell about 10%, Citigroup Inc., seen as the most global of the US banks, dropped approximately 9%.

Also see: Morgan Stanley Forex outlook post Brexit

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