"The pound is one of the most overvalued currencies in the world and will suffer next year as the Government ramps up spending cuts and uncertainty about Britain’s future in the EU weighs on growth.
Analysts at Deutsche Bank warned that the Bank of England may not be able to raise interest rates “at all” if Britain’s recovery slows.
It believes the pound could fall as low as $1.27 next year and $1.15 in 2017 from about $1.485 today if the US Federal Reserve continues to tighten monetary policy and the Bank of England leaves interest rates on hold.
“We have various different ways of looking at currency valuations and what we find is that sterling is the most expensive currency out there at the moment - even including the dollar,” said Oliver Harvey, foreign exchange strategist at Deutsche Bank. Earlier this year, the International Monetary Fund said the pound was between 5pc and 15pc overvalued.
Several Bank policymakers, including Governor Mark Carney and even hawkish rate-setter Martin Weale have played down the prospect of a rate rise in the next few months as a renewed fall in oil prices and weak wage growth keep inflation well below the Bank's 2pc target. "
Source: Pound is 'most overvalued currency in the world', analysts claim - Telegraph
AtW's comment -
Analysts at Deutsche Bank warned that the Bank of England may not be able to raise interest rates “at all” if Britain’s recovery slows.
It believes the pound could fall as low as $1.27 next year and $1.15 in 2017 from about $1.485 today if the US Federal Reserve continues to tighten monetary policy and the Bank of England leaves interest rates on hold.
“We have various different ways of looking at currency valuations and what we find is that sterling is the most expensive currency out there at the moment - even including the dollar,” said Oliver Harvey, foreign exchange strategist at Deutsche Bank. Earlier this year, the International Monetary Fund said the pound was between 5pc and 15pc overvalued.
Several Bank policymakers, including Governor Mark Carney and even hawkish rate-setter Martin Weale have played down the prospect of a rate rise in the next few months as a renewed fall in oil prices and weak wage growth keep inflation well below the Bank's 2pc target. "
Source: Pound is 'most overvalued currency in the world', analysts claim - Telegraph
AtW's comment -
