The pound has fallen from its peak of 1.5929 dollars in June to around 1.49 dollars currently. It is forecast for only a modest rise to 1.52 dollars by the end of 2016. However, it has appreciated by around 6% against the euro as ECB policy has widened the monetary divergence between the two currencies. The euro is expected to weaken further in 2016 to 0.69 pounds from the current levels of 0.72-0.73 pounds. Of course, any changes to the rate outlook are likely to alter the path of sterling heading into 2016. The BoE’s policy will largely depend on oil prices, wage pressures and growth rates in the UK’s main trading partners. Based on the market implied curve, UK rates are not expected to rise until the first quarter of 2017. However, according to a Reuters poll, economists are expecting a 0.25% rate hike in the second quarter of 2016 and another quarter point rise in the final quarter of 2016
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