GBP/USD: selling the GBP will remain an important theme on the forex in 2017 (Goldman Sachs)

Goldman Sachs remains a seller of the GBP:

"Selling the GBP doesn't seem to attract crowds anymore, but we believe that selling GBP remains a lively theme on the forex.

In mid-November, we lowered our GBP/USD forecast to 1.20, 1.18 and 1.14 within 3, 6 and 12 months. Selling the euro and the GBP against the dollar is our strategy for 2017.

There is of course short-term uncertainty (decision of the English Supreme Court). That being said, Mrs. May pointed out that the Brexit remains the way forward and that Article 50 will be triggered in March. We believe that the debate on the legality of the activation of Article 50 makes us forget this truth. We believe that the pound is not yet "cheap". We estimate that the potential for decline, compared to pre-referendum levels, is between 20% and 40%.

The uncertainty surrounding the terms of the UK's exit is the main reason behind our bearish view on the GBP." says Goldman Sachs.