Bank of America (BofA) has released a foreign exchange market forecast that sees the Euro-US Dollar exchange rate reaching 1.12 by the end of the year. The bank’s analysts expect most of the euro’s strength to occur in the second half of the year, putting their forecast above the consensus estimate of 1.08 for 2024.
Beyond the euro, BofA’s analysis remains focused on G4 currencies. The pair is currently trading in line with the bank’s end-2024 forecast. However, BofA noted that risks of intervention in the currency pair still exist.
The British pound (GBP) is also on BofA’s radar, with the bank maintaining a constructive view of the currency. This optimism is fueled by stronger-than-expected UK Consumer Price Index (CPI) data. However, BofA acknowledges that the upcoming UK general election is likely to be a focus for the market in the short term.
BofA’s broader view of foreign exchange markets includes a forecast for the US dollar to gradually depreciate across most G10 currencies over the course of this year and next.
The forecast also assumes slightly greater depreciation of the US dollar against higher beta G10 currencies.
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