Global Macro Service > Research Briefings > United Kingdom

Sterling will rebound over 2017, defying Brexit bears

The UK serving its divorce papers on the EU tomorrow will not herald another plunge in sterling. We think the pound is significantly undervalued. It hasn’t broken below the October lows despite the hawkish policy shift by the Fed, a less dovish ECB and Brexit-specific shocks materialising. Sterling will likely rebound to 1.32 against the dollar by end 2017. We see risks of an overshoot to our forecast in the intervening period.

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