[achiever]

GBP’s depreciation over the past two months means that it is now at a very attractive level for longer-term investors. The depreciation is largely due to the market’s view about relative monetary policy and concerns about the fiscal position. Analysts expect the former to prove temporary and think the latter overdone – although the fiscal position does present potential downside risks to GBP. GBP is undervalued relative to the EUR on short- and long-term perspectives and it is likely to appreciate from these levels. Sell EUR/GBP seems to be good strategy right now. The main risk to this forecast is that investors become increasingly concerned about the fiscal position. If so, GBP is likely to be more vulnerable against the USD and JPY, as this risk is most likely to materialize if the global economy takes a downturn and/or equities sell off sharply.