UBS warns of risks for pound due to political and fiscal situation in Britain

UBS left unchanged its forecast for the British pound against the US dollar. However, as noted by analysts of the bank, the fall of the pound against the dollar in mid-June reflects the unsettled problems in the political and fiscal spheres of Britain.

Despite the recovery of the British currency after the government's intervention to stabilize markets, UBS believes that some part of the damage is likely to persist, at least in the short term.

UBS analysts estimate that the fiscal situation in the UK will remain a major concern for currency traders and could lead to a resumption of high volatility in the future. At the same time, officials of the British central bank and policymakers will work diligently to solve the problems of the market, the bank experts believe.

The financial institution predicts that other macroeconomic factors will support the pound's upward trajectory against the dollar in the coming months. This view is in line with UBS's broader forecast of US dollar weakness later this year. However, the bank does not rule out the possibility of a consolidation of the US currency in the summer months.