"Uncertain future" for sterling

Securities.

Sterling's recent period of buoyancy doesn't look set to last if comments from economist David Page are to be believed.

Mr Page said: "Sterling has got an uncertain future over the next few months because of the uncertainty of the election. We wouldn't be too surprised to see sterling at least at these levels, or possibly weaker still."

He added that sterling was "desperately undervalued" and went so far to suggest that analysts from Investec Securities believe that sterling "could be close to 25 per cent undervalued against fair value to the euro".

Analysts have given many suggestions for the undervaluing of sterling, including worries about the nation's fiscal debt and coming election doubts.

Mr Page added the further possibility that the flow of international capital to "safe haven areas" could have had a negative effect on sterling's value.

One pound sterling bought $1.615 at 16:00GMT today (January 22nd), down 0.53 per cent.

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Posted by Eleanor Ward