, on Wednesday, the pound continued to fluctuate against the US dollar, and is currently trading around 1.2907.
UBS expects pound to fall to a new low against the US dollar when the UK hits Article 50 of the Lisbon Treaty to initiate Brexit and will gradually rebound after that.
UBS said that the pound has risen from 1.21 to nearly 1.30 in the past two months, and this increase is too fast. After British Prime Minister Maye announced that he would hold an early election in June, the market ruled out the possibility that the two-year Brexit negotiations would leave the pound in jeopardy.
UBS pointed out that once the June election is settled, the Brexit process will really begin. The EU has made it clear that an agreement must be reached on the "breakup" clause before negotiating future relations between the two sides. It seems that the pound may face huge challenges in the third and fourth quarters of this year.
UBS said that maintained the three-month and six-month forecasts of the pound sterling against the US dollar unchanged at 1.28 and 1.30 respectively, and believed that the level above 1.30 is unsustainable, and the possibility of the pound sterling falling back to 1.25 against the US dollar in the next few months is not ruled out.
