Lumon Monthly Outlook - GBP/USD Intelligence (February 2022)

Lumon on Feb 8, 2022 8:20:06 AM

Monthly GBP/USD Forecast

The graph below shows the high, low, and mean forecasts from Reuters Eikon, highlighting the point of view of over 40 financial institutions. (02/02/22)

Monthly GBPUSD Forecast - Feb 2022

GBPUSD in 12-Month Range

The indicator below shows where the currency pair is currently trading in the calendar year – giving context on whether now is a good time to make overseas payments. (04/02/22)

GBPUSD in 12-Month Range - Feb 2022

6-Month Forecast Distribution

The histogram below explains the 6-month currency exchange forecast to show its distribution and put further
context into the 6-month market view. For example, among the 48 forecasters, 31 predict that GBPUSD will be
equal to or greater than 1.3500 in 6 months' time.

6-Month Forecast Distribution - Feb 2022

Key Data Releases and Events this Month

Key Data Releases and Events this Month - Feb 2022

Economic Backdrop

It should be noted that the data contained within this document was prior to the BoE meeting on 03/02/22; that
said the market had already started adjusting interest rate expectations due to changing rhetoric from senior
officials.

Sterling has remained fairly resilient considering the political uncertainty amidst “Party-gate”; the general train
of thought with this is if we saw PM Johnson leave office, the UK is likely to be in a safer pair of hands.

The market is continuing to articulate the pace of interest rate hikes following the first back-to-back rate hike
since 2004. Goldman Sachs have suggested that we could see back-to-back rate hikes up to May resulting in
interest rates at 1.00%. The BoE have the unenviable task of setting policy in an unprecedented time, increase
rates too quickly and they risk impacting growth, increase too slowly and inflation becomes more embedded.
The market will be watching economic data to try and second guess the pace of the hiking cycle for the
remainder of the year.

Data Analysis

The most recent forecast has shown a longer-term view (12 months) of the highs and lows post higher
forecasts from 1.4600 and 1.2600 to 1.4700 and 1.2800. In the meantime, the 6-month forecast is skewed to the
upside, 31 out of the 48 forecasters are predicting it to be equal or higher than where we are roughly at the
time of writing.

However this data was publish prior to the BoE meeting.

Bespoke Requirements

These are some of the data sets and indicators that we use to support businesses when formulating policy
and/or making decisions on when to make overseas payments, by how much, and for how long.

If you’re looking for a tailored analysis and information to support your decision-making, please feel free to
discuss this with your Lumon Account Manager.

 

 

This document is intended to provide you with information on the services Lumon Pay Limited (LPL), Lumon Risk Management Ltd (LRM) and Lumon FX Europe Limited (LEL) offer and should not be interpreted as advice or as a solicitation to offer to buy or sell any currency or as a recommendation to trade.

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Lumon FX Europe Limited, trading as Lumon, is regulated by the Central Bank of Ireland. Lumon FX Europe Limited is registered in Ireland. Registered address: 98 Lower Baggot Street, Dublin 2. Registration No. 631617.

Lumon Risk Management Ltd ("LRM"), trading as Lumon, is a company registered in England with registered number 06333730 and registered address at Spaces, Building 1 Chalfont Park, Chalfont St. Peter, Gerrards Cross, England, SL9 0BG. LRM is authorised by the Financial Conduct Authority as an Authorised Payment Institution (FRN: 567835) for the provision of payment services. LRM is also authorised and regulated by the Financial Conduct Authority as an investment firm (FRN: 671108)