Published by Jamie Jemmeson
Currency traders are positioning themselves unnecessarily short on the pound, according to Goldman Sach's chief European economist Erik F Nielsen.
In an interview with Bloomberg yesterday (March 9th), the analyst said that while political turmoil in the UK is a just cause for concern, the extent of losses on the pound may be excessive.
"People are very bearish on the UK, probably more than they should be. The euro is clearly in its biggest crisis since it started, so it's kind of strange that it's overvalued," he added.
In a round of bearish forex hedging last week, the pound slipped to a ten-month low against major competitors, but Mr Nielsen insisted that the UK's independence from the euro may yet be a blessing, as a weakened pound is likely to boost international trade.
Sterling continued to fall during the Asian trading session this morning amid concerns that the UK may see its first hung parliament 1974.
