The British pound is on the back foot against the greenback, trading at the 1.50 handle. Can it break lower, or is it set for a rebound? The team at ANZ sees the recent moves as overdone, and explains: Here is their view, courtesy of eFXnews: Cable’s plunge in early 2015 looks overdone as the pound is caught up in the disinflation theme, says Australia and New Zealand Banking Group (ANZ). “Most observations of valuation suggest the pound is undervalued against the USD. The economy has lost some momentum, but continues to perform favourably versus most of its peers,” ANZ argues. As such, ANZ thinks that based on the expected growth performance, sterling’s weakness against the USD looks overdone and can probably best be explained by a continued loose monetary stance coupled with political uncertainty. “Probably the best measure of valuation is the trade position. In the first 9 months of last year, the UK ran an average monthly trade surplus with the US of £860m. The average cable exchange rate over that period was 1.66 and interestingly the average of the past 15 years has been 1.66. That would suggest that the pound is undervalued against the USD at current levels,” ANZ clarifies. “We therefore caution against becoming bearish on cable at current levels and would view extended near term weakness as a buying opportunity,” ANZ advsies. “However, political uncertainty and the looming prospect of outright sovereign bond purchases by the ECB are weighing on sentiment fuelling a continued appetite for dollars for the time being,” ANZ adds. For lots more FX trades from major banks, sign up to eFXplus By signing up to eFXplus via the link above, you are directly supporting Forex Crunch. Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam Opinions share Read Next EUR/USD < 1.18 - break confirmed Yohay Elam 8 years The British pound is on the back foot against the greenback, trading at the 1.50 handle. Can it break lower, or is it set for a rebound? The team at ANZ sees the recent moves as overdone, and explains: Here is their view, courtesy of eFXnews: Cable's plunge in early 2015 looks overdone as the pound is caught up in the disinflation theme, says Australia and New Zealand Banking Group (ANZ). "Most observations of valuation suggest the pound is undervalued against the USD. The economy has lost some momentum, but continues to perform favourably versus most of its peers," ANZ… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.