Pound may be undervalued

6 February, 2017

The British pound has dropped down through the $1.2500 mark today in European trading on the back of disappointing local data, but some are predicting a bottom is forming and there is substantial upside to come.

At 2.04pm (GMT) the British currency was trading at $1.2481 down from $1.2535 in yesterday’s trading.

The Markit services purchasing manager/s index (PMI) hit the market earlier today at 54.5 against analysts’ expectations for a number of 55.8, and may justify the BOE’s neutral stance on lifting interest rates any time soon.

Although the pound may experience further pressure in the nearest future a number of analysts including Kamal Sharma, an FX Strategist with Bank of America Merrill Lynch Global Research in London think that the worst days are over,

“Although we retain a near-term bias for further GBP weakness, we think the medium-term fundamentals look more positive,” Mr Sharma said

"As a result, the divergences between these key drivers and GBP, which have built up as political risk premium has dominated price action, could be closed. In our view, with some of main pillars that have historically driven GBP through the business cycle remaining resilient to the Brexit shock, the upside risks to Sterling are building,” he added.

He also noted that the pound has failed to follow in the footsteps of an improving jobs market and a continuation of growth in the real estate sector and this may be another factor for the currency to rise,

“GBP looks cheap versus macro drivers such as the labour & property market and against the backdrop of improving global growth,” he added.


Source link  
Oil surges on conflict concerns

The oil price has continued to rise in today’s trading session after yesterday’s gains on the back of attacks on two oil tankers in the Gulf of Oman...

Gold need to hold this level

The gold price is now trading at its lowest level since the start of the year and is now consolidating around the $1275 mark and according to one...

Gold faces key moment

The gold price has remained above the $1300 mark in today's trading session after breaking this important level yesterday and today's outcome...


US dollar down on dovish Fed

As predicted yesterday, the Fed kept interest rates on hold but the following monetary statement was much more dovish than analysts had predicted...

Gold needs some big news

The gold price is under further pressure in today's trading session as investors ponder the chances of another rate hike from the US Federal Reserve after the release...

Good news for the precious metal

Gold just got another reason to cheer after the latst minutes meeting from the US Federal reserve where the tone left many analysts predicting that...


Gold to stay above $1300

The gold price has recovered strongly over the past 3 trading sessions after coming perilously close to touching the $1300 mark and...

Oil price hinges on trade talks

Oil is down once again in today's trading session as investors and the market alike remain divided on the future direction of the price with a lot...

Oil needs Opec cuts

The latest tumble in the oil price has now reached gigantic levels, almost equaling the declines reached during the global financial crisis and according to some analysts, we may...

  


Share it on:   or