British Pound Is The 'Most Overvalued Currency In The World,' Analysts Argue

According to a research report by The Telegraph, the British Pound is considered to be the "most overvalued currency in the world."

The Telegraph, quoting analysts at Deutsche Bank, reported that the Bank of England may not be able to raise its key interest rates in the coming year.

The analysts added that the pound could fall as low as $1.27 per U.S. dollar in 2016 from its current $1.485 today. The following year, the pound could fall as low as $1.15 if the U.S. Federal Reserve continues to tighten its monetary policy at a time when the Bank of England leaves its rates unchanged.

"We have various different ways of looking at currency valuations and what we find is that sterling is the most expensive currency out there at the moment - even including the dollar," Oliver Harvey, a foreign exchange strategist at Deutsche Bank told The Telegraph. "Earlier this year, the International Monetary Fund said the pound was between 5pc and 15pc overvalued.

At the same time, analysts at both Deutsche Bank and Barclays expect the euro to reach parity against the US dollar by the end of 2016 as monetary policy in both regions "continues to diverge."