GBP/USD: BNP Paribas says pound is undervalued, could move up in short term

BNP Paribas believes that the GBP is undervalued and that we could see a GBP/USD rebound in the short term.

"In the UK, the key event this week will be the autumn statement on public finances.

Our economists do not anticipate a broad stimulus effort, but an overall neutral statement, which should not significantly impact the GBP on the forex. But, contrary to our expectations, if the announcement is more expansionary, we think the BoE will be even less inclined to ease more, which is bullish for the GBP.

Conversely, fiscal austerity would be bearish for the currency, as this would put more pressure on the BoE to ease.

We continue to believe that the GBP is undervalued, especially following the Theresa May's "softening" speech. We target 0.80 on the EUR/GBP by the end of the year. We maintain a long position on the GBP/USD, targeting 1.2982."