LONDON, Aug 7 ― The pound’s biggest bull is keeping the faith.

John Goldie, a foreign-exchange dealer at currency advisory company Argentex LLP in London, is maintaining his bullish year-end pound forecast even after the Bank of England this week announced additional stimulus measures and a stronger-than forecast US jobs report revived speculation that the Federal Reserve will increase interest rates by December.

Goldie sees sterling climbing to US$1.38 (RM5.57) by year-end ― almost 9 per cent higher than the US$1.27 median estimate of analysts in a Bloomberg survey ― making him the biggest bull in an otherwise bearish market. While the pound weakened after the BOE’s decision, Goldie based his estimate on a better-than-expected economic performance for the UK by the end of the year, and no more than one increase in US rates.

“My standpoint is essentially no, or only one, rate hike in the US this year, a slowdown across the board no doubt, but not as deep a slowdown as warned and as suggested,” Goldie said in an interview Friday. “Assuming we do avoid negative territory in the third quarter, then I think there’s even room for us to be pushing higher as we go towards the end of the year.”

BOE stimulus

Goldie’s forecast may be symptomatic of the uncertainty following the UK’s decision to leave the European Union in June. On August 4, the BOE cut interest rates for the first time in seven years, by 25 basis points to 0.25 per cent, and raised its asset-purchase target for the first time in four years by £60 billion to £435 billion, in order to support the economy.

The pound slid 1.2 per cent this week to US$1.3069 as of 5pm Friday in London, having tumbled 1.6 per cent on the day of the BOE announcement. That’s still higher than the 31-year low of US$1.2798 reached on July 6. Sterling dropped for a third week versus the euro, losing 0.4 per cent to 84.78 pence.

“While sterling did inevitably weaken yesterday on the news, we haven’t broken new levels,” Goldie said. “We certainly haven’t gone anywhere near the Brexit lows.”

Goldie’s sanguine view about the economy is supported by Citigroup Inc’s UK Economic Surprise Index. While some reports suggested Brexit is taking its toll on consumer confidence and business activity, Citi’s index, which measures the strength of key data relative to analyst expectations, rose to the highest level since September 2013 this week. A positive reading shows that data releases were stronger than economists expected.

“These are already extremely stretched levels in cable,” Goldie said, referring to the pound-dollar exchange rate. “Historically speaking we have only been down in this direction once before in the last fifty years.” ― Bloomberg