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The British Pound is described as "a diamond in the rough," by Goldman Sachs (NYSE:GS) in their new year-ahead forecast publication, in which a new set of post-election forecast targets suggest solid gains in the coming months.
"We think a bullish set-up for Sterling should see it keep pace with a broader appreciation in the Dollar," says Kamakshya Trivedi, Head of Global Foreign Exchange at Goldman Sachs.
Given the centrality of Goldman Sachs in the world's financial architecture, the new research and forecasts will significantly impact how investors frame their perceptions of the FX market in the coming months and will help those with FX payments establish a rational approach to what could be a volatile year.
Verified readers of Pound Sterling Live are able to submit a request to view the forecast target points here.
Commenting on predictions that show the Pound to Euro exchange rate can move well above 1.20, Trivedi says, "We have had a constructive view on Sterling for large parts of this year, and we think most of the arguments are still in place for continued GBP outperformance on G10 crosses in coming months."
The publication comes in the wake of Donald Trump's election victory, which also saw his Republican Party sweep Congress.
The new administration looks set to shake up global trade while further bolstering the U.S. economy, which can keep U.S. interest rates at higher levels for longer.
Tariffs can weigh on the Eurozone's all-important export industry while higher Fed rates will ultimately bolster the U.S. Dollar.
"That is a potent combination for the Dollar. As a result, we no longer expect broad Dollar depreciation, even on a 6- or 12-month horizon. The Dollar will be Stronger for Longer," says Trivedi.
To view the new GBP/EUR point forecasts, please submit a request here.
An original version of this article can be viewed at Pound Sterling Live