Currency Analyst since 2010

IMF: GBP is overvalued

The International Monetary Fund warned that British pound is overvalued by 5-10% and this may hamper efforts to rebalance the British economy, reports the UK Telegraph. According to the IMF, high sterling may hit exporters and take some of the steam out of the improving economy which has the fastest growth pace among advanced economies.

The fund claimed that the Bank of England’s ultra-loose monetary policy was the right course at present, but warned that interest rates may have to rise if inflation starts to increase. The IMF also said that the BoE Governor Mark Carney should improve his controversial “forward guidance”.

The BoE’s Deputy Governor Broadbent said today that the IMF’s view on pound was fuelled by weak global growth. According to him, UK has had sharp bounce in economic activity and current account deficit doesn't threaten British economy.

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