FXStreet reports that economists at Westpac discuss the prospects of the euro and the pound.

“We continue to expect the FOMC and other major central banks to 'hold the line' on policy for an extended period, anticipating that a US taper will not be seen until the second half of 2022 and that rate hikes will follow with a lag come 2024. Relative economic growth will arguably then remain the most compelling factor for FX markets in the period ahead.” 

“For DXY, we look for a further 3.2% fall to 87.3 in the second half of 2022 after which the US dollar is expected to stabilise and begin to grind higher as US monetary tightening takes effect.”

“Between now and September 2022, the euro is expected to gain 4.3% from 1.2179 currently to 1.27 on sentiment and strength in exports. Having outperformed the euro in recent months, future gains for the UK's sterling are likely to be modest, a 1.8% rise to 1.44 is our base case.”