Sterling and Euro should weaken substantially through early 2024 – Wells Fargo

In a backdrop of Dollar strength combined with grim local economic outlooks, economists at Wells Fargo expect the Euro and Pound to underperform.

Softer Pound and Euro through early 2024

Sentiment surveys for both economies have softened sharply in recent months, and European underperformance relative to the US should weigh on both currencies.

The European Central Bank and Bank of England have also signaled that policy rates have likely reached their peak, thus lessening interest rate support for their respective currencies.

Against this backdrop, we see a softer Pound and Euro through early 2024, targeting a low for GBP/USD around 1.1600 and a low for EUR/USD around 1.0200.