Investors should sell the pound versus the dollar, betting it will weaken to $1.48, according to Morgan Stanley.
The pound may fall to 93 pence per euro should the U.K. economic recovery slow further or Bank of England policy makers signal more credit-easing measures, according to Morgan Stanley.
The only major currency rivaling the dollar’s decline since July is the pound, and foreign-exchange strategists say the worst is yet to come for Britain’s legal tender.
Analysts comment on Switzerland’s central bank decision to leave its limit on the franc unchanged, resisting pressure from exporters to further curb the strength of the currency.
The euro rose against the dollar, after erasing earlier losses, as optimism increased that European leaders will be able to agree on measures to help solve the region’s debt crisis.
Morgan Stanley’s leveraged clients were net buyers of dollars last week, while non-leveraged traders sold the currency, the bank said.
Bank of England Governor Mervyn King has moved closer toward joining the Federal Reserve in a global push to add stimulus and stave off renewed recessions.
Morgan Stanley advised selling the pound against the dollar, saying a contraction of gross domestic product and Bank of England Governor Mervyn King ’s reluctance to raise interest rates will weigh on sterling.
"There's been a pent-up demand for buying some of the most sought-after homes and properties that could ever be available on the market."
- Tim Davis on Jul 23, 2014