FXStreet (Guatemala) - Lee Hardman, analyst at Bank of tokyo mitsubishi, explained that the pound has underperformed during the current period of heightened risk aversion which has pushed it lower than justified by relative economic fundamentals in our view.
Key Quotes:
"The still favourable relative economic fundamentals were evident again yesterday in the latest UK GDP report which revealed an upward revision to growth.
The economic recovery in the UK since the global financial crisis was stronger than initially recorded leaving real GDP at the end of Q2 at 5.9% higher than the peak prior to the global financial crisis compared to the previous estimate of 5.2%.
There was also a more favourable development in the UK’s current account deficit which narrowed more sharply than expected to 3.6% of GDP in Q2 from 5.2% of GDP in Q1.
The narrowing was mainly driven by the trade deficit which reached its lowest level since 1998. The trade balance can be erratic and likely exaggerates the underlying improvement in the current account deficit, which remains elevated and a long-term concern. We still see scope for the pound to regain lost ground ahead."
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