Analysts at Nomura Holdings Inc. advise investors to bet that in 2011 the British pound will gain versus the greenback, the single currency and Japanese yen.

The specialists note that it’s becoming less and less likely that the Bank of England will follow the example of US Federal Reserve conducting the second round of quantitative easing. In addition, UK currency is going to be supported by the credible fiscal consolidation plans and reduced political risks from a stronger-than-expected coalition government. As a result, sterling that has lost 20% to US dollar since 2007 is at last going to rebound.

Nomura strategists purchased pound against a basket that consists of equal shares of euro, dollar and yen. A basket is needed to eliminate the otherwise negative USD correlation with EUR/GBP.

According to the analysts, sterling will trade at $1.63 in the first quarter of 2011 (previous forecast was at $1.67) and advance to $1.73 by the end of the next year. Euro’s expected to fall from $1.35 in the first quarter to $1.32 and then recover again to $1.35 by December 2012. During the forecast period Japanese currency will trade at 80 yen per dollar and then decline to 85 yen per dollar.



Chart. Daily GBP/USD

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