RBS: FX traders to see pound underperform in the near term

The near-term performance of the pound is likely to be poor, according to the team responsible for forex trading strategy at the Royal Bank of Scotland (RBS).

A note released to corporate clients earlier today observed that sterling is unlikely to continue to be viewed by FX traders as a safe haven currency.

It suggested that this is in part due to the sluggish gross domestic product growth recorded in the second quarter of the year, which saw the economy expand by only 0.2 per cent.

"RBS FX Strategy team in their recent note argues that in the near- term a lack of real rate support for GBP will see it underperform," RBS said.

However, it added that the long-term prospects for the currency are fair, particularly against the US dollar and the euro.

At 07:00 BST today, the pound to euro exchange rate was 1.1294 and against the dollar it was 1.6316.

Posted by Greg Secker