After last month’s data showed weaker than expected services growth in the UK, Barclays Capital has cut its rate six-month and one year rate forecast for the Pound citing Bank of England’s outlook on interest rates.
Barclays has revised the six-month rate to $1.74 from $1.76 and 85 Pence per € from 84 Pence per €. Next 12 months forecast was similarly revised to $1.76 from $1.80 and 82 Pence per € from 80 Pence.
After report from the Chartered Institute of Purchasing and Supply showed that the services sector expanded the slowest in May in the last three months, Barclays pushed back its forecast for the Bank of England to raise the key rate in November from August.
“We continue to expect some appreciation for the pound against both the dollar and euro, but in trade-weighted terms pound is likely to remain significantly weaker than its pre- crisis norm”, said Paul Robinson – head of European currency strategy at Barclays.