GBP Hasn’t Been This Undervalued Since Reagan Was President
The British Pound is hovering near its one-month low of 1.23 versus the USD.
While most investors are aware of how much the pound has fallen since Brexit, prior to which the GBP fluctuated in a relatively tight range of 1.40-1.50…
…the following chart puts the move into perspective. On a purchasing power parity basis (over the last 41 years), the GBP has not been this undervalued versus the USD since 1985. Over that time period, the current 24% undervaluation is second only to the 38% undervalued level reached in February of 1985. From there, it took a little more than two years for the currency to make its way back to parity with the dollar.