The pound will coast for six months but end 2011 a little higher than where it started the year as the Bank of England begins to unwind its ultra-loose monetary policy in the second half, a Reuters poll found. Median forecasts from the poll of over 50 analysts, taken over the past week saw cable at $1.55 in a month and then nudging up to $1.58 in a year, a little weaker than in December's poll.
"As the BoE will not follow the Fed in another round of asset purchases and should gradually start hiking rates in late 2011, while the Fed will remain on hold, cable should enjoy a sizeable rebound in H2," said Roberto Mialich at UniCredit.
Mialich was the second most accurate forecaster in Reuters FX polls last year, having topped the league in 2008.
A Reuters poll published last month predicted the BoE would begin raising rates from October whereas the US Federal Reserve, which has bought trillions of dollars worth of bonds to bolster the world's biggest economy, will be more cautious.
But 12-month forecasts were fairly wide, ranging from $1.36 to $1.83, suggesting uncertainty remains and the pound slipped to a three-month low late last month after a downward revision in UK economic growth reminded investors the country's recovery remains fragile.
The Office for National Statistics Office revised down third quarter growth to 0.7 percent from 0.8 percent and said growth in the first two quarters of the year was also slightly weaker than previously reported.
A Reuters poll taken last month suggests growth will slow further, averaging between 0.3 and 0.5 percent per quarter through this year.
"The underlying dynamics of the UK economy remain deeply worrying," said Dorothea Huttanus, Head of Foreign Exchange and Money Markets at DZ Bank and the most accurate forecaster across last year's polls.
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