Goldman flags British pound as most overvalued G10

Goldman Sachs says the British pound is now the most overvalued G10 currency. In a client note by strategist Stuart Jenkins, the bank argues Sterling’s post-Brexit recovery has overshot what the UK’s fundamentals justify. Goldman estimates Brexit permanently dented Sterling’s fair value by about 6%. Using its GSDEER (Goldman Sachs Dynamic Equilibrium Exchange Rate) model, it had already flagged the British pound as the most structurally overvalued G10 currency in January 2026. The new note says the gap has widened. Why Sterling ran “hot”: persistent UK inflation kept the Bank of England hawkish, supporting higher interest rates. That helped attract foreign capital into UK bonds, boosting demand for the British pound via yield differentials. Outlook: Goldman expects increasing downward pressure on Sterling going forward, implying weakness risk for long British pound positions. The note warns this could spill over into UK equities and gilts, and for international holders it could create currency losses even if underlying assets perform well. No specific price targets or timelines were provided, but the directional message is clear: the British pound looks expensive versus fundamentals and may weaken as the inflation/rate premium fades.