BREAKDOWN: THE DISMAL ART OF FORECASTING STERLING
Currency strategists can be divided even when they agree. Forecasts for where the pound will be trading against the dollar in 12 months’ time ranged from $1.05 to $1.47 in a Reuters poll published on Oct 6. Even after a flash crash on Oct. 7, it’s fair to say that most pound-watchers expect it to fall further over the coming months. A spat between UK retailer Tesco and supplier Unilever on who takes the hit from a weaker currency suggests businesses too are starting to prepare for sterling to be lower for longer.Clever economic models sometimes underpin such predictions.