2020 British Pound Forecast
Forecasts for the British Pound vary from bank to bank and from month to month. This article looks at the general trend in the GBP forecast and how it might impact your home currency.
In 2020, most bank analysts predict the Pound Sterling will remain weak under 1.3000, against the US Dollar.
Uncertainty from Britain leaving the Eurozone (Brexit) continues to have a negative impact for the GBP currency. The process is penciled in to start in February 2020. However, UK Prime Minister Boris Johnson has to convince the parliament to accept any Brexit proposals and this is proving to be difficult.
As a result, many banks are predicting hiccups along the way, which means the GBP will continue to suffer against other currencies.
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Updated in November 2019
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British Pound forecast in 2019
For the rest of 2019, most bank analysts predict the pound sterling will get weaker. Generally speaking, banks expect the rate to decline towards 1.2000 in December from current levels of 1.2800.
Will the GBP/USD get stronger in 2020?
Unlikely. But if we agree with most of the major banks the GBP could rise slightly by the end of 2020.
Let's examine the 4 most likely reasons the British Pound will remain weak at current forecast levels:
- A Brexit deal isn't met, worries escalate, devaluing the British Pound against other currencies
- The UK economy slows down and inflation only slowly and gradually picks up, increasing the chance of interest rate cuts
- Economic growth in Europe (Britain's major trade partner) slows more than expected, reducing trade and lowering demand for British imports
- The US economy picks up, US political risks ease, and the Federal Reserve (central bank) increases interest rates, supporting the USD
How does a weaker British Pound affect me?
Expats and Pensioners
A weaker pound is disastrous for British people living abroad. Many who have moved overseas will see a dramatic fall in spending power. However, the GBP could improve in 2020.
For pensioners, many who have retired abroad will see a dramatic fall in the spending power of any UK state or private pension income with a weaker Sterling.
A couple years ago £100 pounds would have gotten you $200 in Australia, one of the most popular retirement destinations for British expats. But now the same £100 pounds of income will only return $172 Australian dollars, almost 15% less.
If you’re in a hurry to sell your UK asset, such as a house or company, to support your lifestyle overseas, you might get more interest from foreign buyers with a weaker pound. While you’ll get more demand for your asset, you might not get the value you want from the sale.
It’s not really a good time for Brits to go abroad, but if the pound does improve slightly in 2020 it might be ok to do some summer travel.
Holidays in Europe and elsewhere are currently still painfully expensive, which means the idea of a staycation holiday closer to home might be more tempting during the winter months.
Foreign tourists visiting the UK will benefit from a weak GBP. So UK tourist attractions and anything associated with the leisure industry, such as restaurants and hotels will do well. Working in these industries will certainly be beneficial.
AUD to GBP Exchange Rate Calculator
What are the key influences on the GBP?
1. British (UK) Economy
The UK is growing – but really slowly. This means the Pound Sterling is unlikely to rise strongly. Many were predicting a drastic economic collapse after the UK left the European Union (Brexit), but this hasn’t happened. Needless to say, many are unclear on what will happen next – and this uncertainty is negative for the GBP.
British politics has a big influence on the Pound. When the UK left the European Union in 2016, many people questioned whether the UK would be better off, which created much uncertainty. Greater uncertainty from politics means investors will sell the GDP, because there is a greater chance of it getting weaker.
3. Other Currencies
The US dollar (USD) significantly influences the GBP. Generally, when the USD gets stronger, the GBP is relatively weaker and vice versa. Interestingly, the pound sterling is one of the relatively few currencies that is worth more than the US dollar (meaning that one pound buys more than one dollar).
British Pound bank forecast currency pairs
Where to find the best GBP cash rate
In Australia, the best cash rates are found in major cities. We regularly check the main money changers in each CBD to find out the best forex exchange rates for British Pounds in town.
How to track down the best cash rate
You can either walk around to each money changer, try and call each one and check their rate or you can use our city and suburb guides:
General advice: The information on this site is of a general nature only. It does not take your specific needs or circumstances into consideration. You should look at your own personal situation and requirements before making any financial decisions.