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British pound is most undervalued currency in the G10

The British pound is trading around key levels, as traders reported a lower than usual volumes at the end of the year. The British currency close to its 50-day moving average against the US dollar at a level below which the pound is not close this month. Meanwhile the EUR is hovering near the 200-day moving average against the British pound at a level that was not reached by one year.

According to the economics, the British pound is one of the most undervalued currencies among those in the G-10 and is expected to recover next year, as political risks are increasing elsewhere.

The depreciation of the currency by 16% against the US dollar since Brexit referendum in late June can act as a pull factor for many central banks and institutional long-term investors when rebalance their portfolios.

Bank of England (BoE), which refrained from action at its last meeting last week, will likely take a more aggressive approach in 2017 if economy growth continue serving surprises.

Tonight the British pound depreciated against the dollar to 1.2406 dollars per pound close to the 50-day moving average is 1.2416 dollars per pound.

One Euro is exchanged with a growth of 0.56% to 0.84, and 200-day moving average is 0.8314 pounds per euro.

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