Europe’s largest asset manager, Amundi, predicts a significant surge in the pound throughout the rest of the year, as Britain’s stable economy and government stand in contrast to global uncertainties. Amundi forecasts that sterling will rise to $1.35 by the end of the year, up from $1.293 today and $1.273 at the start of 2024.

Amundi, which manages $2.3 trillion (£1.8 trillion) in assets, joins major banks like Goldman Sachs in favoring the pound following Labour’s landslide election victory. Meanwhile, the US presidential race faces uncertainty with Joe Biden's decision to exit and Kamala Harris emerging as the expected Democratic nominee. France is also experiencing political turmoil with a hung parliament.

The Bank of England is expected to delay cutting interest rates compared to its peers, which is expected to boost sterling further.

Andreas Koenig, Amundi’s head of global FX, stated, “You have an improvement in the economic environment, and you have a relatively stable government, so you have a lot of arguments in favor of sterling. It might be less risky and it might be a diversifying alternative in the portfolio, which is supportive.”

Since the start of the year, the pound has risen nearly 1.5%, outperforming all Group-of-10 peers against the dollar and surpassing $1.30 last week. Against the euro, it is the strongest since August 2022 at around 84p. Amundi predicts it will eventually rally further to make a euro worth 82p.