By most reckonings the pound is now significantly undervalued in PPP implied terms, and is close to certain to recover over the medium and long term. The slide has been sentiment driven rather than one primarily related to the performance and fundamentals of the UK economy, therefore could reverse quickly and catch investors out.
James Beaumont, international head of portfolio research and consulting at Natixis noted: “UK advisers may not always take into consideration the impact that currency plays within a portfolio, but in 2016 investors who held non-sterling assets strongly benefited as the pound depreciated following the Brexit vote in June 2016.”
