GBP/USD: At 1.38 by year-end in the best scenario – UBS

The US dollar appreciated substantially through the crisis as investors sought the liquidity and safe-haven appeal of the US dollar. Nonetheless, analysts at UBS expect the greenback to depreciate and the best to express this view is the cable.

Key quotes

“In our upside scenario, in which safe-haven assets and liquidity are less in demand, we expect the US dollar to depreciate.” 

“Our preferred G10 currency to buy relative to the US dollar is the British pound. The currency remains deeply undervalued considering our estimate of purchasing power parity at 1.53. We target GBP/USD at 1.38 by year-end for our upside scenario, and 1.33 in our central scenario.”