JPMorgan strategist gives his prediction for the British pound next year

Published Fri, Nov 6 20205:59 AM ESTUpdated Tue, Nov 10 20208:38 AM EST

Key Points

The currency pair (GBP/USD) is currently at a similar level where it started the year, at $1.31.
It crashed to $1.15 in March in the wake of the first wave of infections in Europe.

LONDON — With Britain facing the dual issues of Brexit and the coronavirus pandemic, one expert at JPMorgan Private Bank has given his predictions on how sterling will trade against the U.S. dollar. The currency pair ( GBP/USD ) is currently at a similar level where it started the year, at $1.31, having crashed to $1.15 in March in the wake of the first wave of infections in Europe. However, going forward, sterling could rise against the greenback, according to Sam Zief, global head of FX strategy at J.P. Morgan Private Bank. "In terms of outlook for the exchange rate, sterling can gain against the U.S. dollar next year because it's simply a fact that when the dollar is weakening broadly everything tends to participate," he told CNBC's "Squawk Box Europe" Friday. But there are other factors which could strengthen the pound. "We do think we will get a Brexit deal by the way by the end of the year and that's going to provide some relief rally as well," Zief said. U.K. and EU negotiators are still working toward new trade arrangements in the wake of the former's departure from the bloc in January. They have until the end of December to bridge their differences or else trade between them will be done under World Trade Organization rules and therefore could become more expensive and harder for exporters on both sides. However, Zief cautioned against a massive rally for sterling. "Bottom line is that we are likely to see only limited upside when it comes to sterling," he said, explaining that the currency is unlikely to go beyond the "mid-30s" level. "And we still think sterling is going to be an underperformer relative to its major peers," Zeif also said, given that the "U.K. has had one of the world's worst Covid experiences, economically speaking." The U.K. economy suffered an unprecedented 19.8% contraction in the second quarter at the height of strict social-distancing measures. The Bank of England said on Thursday that the economy should grow 7.5% in 2021 — in August it had estimated a 9% GDP rate for next year. CNBC PRO subscribers can access live PRO Talks, including our Dec. 2 discussion on opportunities and risks in international markets.

The currency pair (GBP/USD) is currently at a similar level where it started the year, at $1.31, having crashed to $1.15 in March in the wake of the first wave of infections in Europe. However, going forward, sterling could rise against the greenback, according to Sam Zief, global head of FX strategy at J.P. Morgan Private Bank.