Investing.com – Barclays expects the Israeli shekel to continue appreciating against the U.S. dollar, though at a slower pace than earlier in 2026, according to a currency outlook released by the bank.
The USDILS exchange rate remains closely correlated with U.S. equity indices due to the large exposure of Israeli investment funds to U.S. equities, Barclays said. Further gains in U.S. stocks would support the shekel, the bank added.
The shekel risk premium compressed during the war in Iran but still remains large, Barclays noted. Any improvement in the geopolitical outlook could offer an additional tailwind to the Israeli currency, according to the bank.
Barclays said the Bank of Israel may push against shekel strengthening if the currency continues to appreciate at the pace observed earlier this year.
Israeli investment funds’ significant holdings in U.S. equities have made the shekel’s movement dependent on the performance of American stock markets, the bank said.
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