The British Pound has rallied further over the course of the past 24 hours to deliver the best exchange rates of three weeks for those looking to buy euros, but further gains material gains will require the economy to catch up with that of the Eurozone while good news on the Brexit front will also be required.
Analysts at Crédit Agricole say that according to their currency valuation models the British Pound "remains significantly" undervalued relative to the Euro, and this could allow for another week of gains in the Pound-to-Euro exchange rate.
The Pound-to-Euro exchange rate recovered sharply from near three-month lows last week and with the charts warning of a correction higher, it could look to stabilise over the coming days, although there are a number of potential pitfalls in the road ahead.
The British Pound is looking to post a third consecutive daily gain against the Euro, Dollar and other major currencies on Thursday as foreign exchange markets correct some of the currency's recent losses.
Despite the Euro having recently lost some steam against the U.S. Dollar and British Pound, there are some positive underlying fundamental developments that suggest weakness should be temporary as investors return focus to fundamental improvements in the Eurozone.
The British Pound fell to a fresh three-month low against the Euro amidst a combination of growing anxiety that the UK and EU will fail to agree a comprehensive free-trade agreement by year-end and signs that the Eurozone's economic recovery from the coronacrisis is outpacing that of the UK.