Barclays Forecast Undervalued Pound / Euro Rate to Recover to 1.30 by Early 2017
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Barclays believe Pound Sterling undervalued at current levels and they projected it to move higher against the Euro over coming months.
The Pound recorded a fourth weekly loss gain against the Euro in the week ending 19th August.
In fact, since mid May the Pound has risen against the Euro in only two of eleven weeks.
Momentum therefore remains firmly pitted against Sterling and forecasts for further declines in the pair are understandable if momentum alone is considered.
But, there are some analysts who beleive a turn in fortunes for the GBP/EUR pair is nigh.
To us calling a continuation of an entrenched trend is easy - we are interested in hearing from those who are willing to stick their necks out there and call a turn in trend.
As such, resarch from Barclays has piqued our interest.
According to analysts, the decline in trade-weighted GBP following the announcement of the Bank of England’s larger-than-expected easing package on 4th of August has taken GBP to about 10% below its pre-Brexit level.
This is also one standard deviation (10%) below the estimated fair-value for the GBP it is argued:
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