U.S. investment bank Morgan Stanley raised its currency forecasts for the euro on Friday, August 11, predicting it would hit $1.25 early next year and be one-for-one versus Britain's pound for the first time in its 18-year history, Reuters says.

Morgan Stanley also cut its forecast for the Mexican peso to 20 per dollar MXN= in the third quarter of next year, saying it would come under pressure ahead of the country's elections.

The euro is the official currency of the eurozone, which consists of 19 of the 28 member states of the European Union: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

The pound sterling is the official currency of the United Kingdom, Jersey, Guernsey, the Isle of Man, South Georgia and the South Sandwich Islands, the British Antarctic Territory, and Tristan da Cunha.