One reason the pound hasn’t sold off more: it’s dirt cheap on a fundamental basis, as implied by its real effective exchange rate, the trade-weighted average adjusted for inflation. With 100 the fair-value level, the pound is currently at 94, compared with a long-term average of 106. Sterling is 12 percent below fair value, according to the OECD’s purchasing-power parity model.
Source: Bloomberg Pro Terminal
Jr Trader Alexander Kumanov
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