Pound on track to be one of the best-performing currencies in 2024

The pound sterling has the potential to become one of the strongest currencies globally this year, thanks to Britain’s robust economic growth. A new Labour government elected in early July has reassured foreign investors, according to several major US investment banks.

Currency strategists at Bank of America estimate that the pound sterling is likely to reach $1.41 against the dollar by the end of 2025, which would be a four-year high. By the end of this year, the pound is also expected to rise to $1.35 against the dollar, marking a two-year high.

The GBP/USD currency pair has already increased 3.19% so far this year, rising 2.56% in the last three months. The pair also hit a two-and-a-half-year high of $1.32 on August 27th this year.

Kyle Chapman, an FX markets analyst at Ballinger Group, told Euronews: “The pound’s strong performance is largely a rebound from a long stretch of underperformance following the 2016 Brexit referendum.

“Several factors have driven sterling’s rise this year: a consistently hawkish Bank of England, more stable politics, an emerging growth advantage versus the eurozone, and a wider improvement in UK sentiment.

“It is likely that sterling can maintain its position as the top currency in the G10 this year. The yen and high beta currencies (e.g. NOK, SEK, AUD) may gain momentum into the final months of the year, especially if a normalization of rates leads to a structural decline in the dollar. However, the pound has already established a strong enough lead to stay ahead.

“I believe GBP/EUR is a good pair to express a positive view on the pound, with the UK economy likely to maintain its growth advantage in the near term, which could also lead to quicker ECB cuts.”