Tuesday's Surge In The British Pound Doesn't Equate A Long-Lasting Rebound

Heading into Tuesday's speech, the British pound was trading below $1.20 and was approaching its post-Brexit lows of $1.184. May's speech made it clear that the government will fight for the best possible access to the single market in a more open and transparent process, which prompted the pound to spike above $1.23 on Tuesday.

So, is now the time to buy the beaten-up currency, which is still lower by 15 percent from its pre-Brexit levels?

Worth A Buy?

According to a Bloomberg report, some analysts are far from convinced now is the time to be buying the currency.

For example, currency strategists at Deutsche Bank said before May's speech that the pound could fall another 10 percent and break the 1.10 against the dollar. The outlook hasn't changed after May's speech.

"We see the speech as a moderately positive outcome relative to weekend headlines signaling a hawkish stance on immigration and relaxed attitude towards EU tariffs," Bloomberg quoted the strategists led by Oliver Harvey as saying.

Athanasios Vamvakidis, a strategist at Bank of America, took the other side of the trade and believe the worst is over for the pound. However, there might be one more leg lower once the U.K. triggers Article 50 and the Brexit negotiation process can officially begin.

What Other Pros Are Saying

• Bank of Tokyo-Mitsubishi's Lee Hardman believes the pound is now undervalued and reflects all of the Brexit related concerns.
• Josh O'Byrne, a London-based strategist at Citigroup believes that "counter comments" from the European Union will damp expectations.
• HSBC Holdings' Dominic Bunning believes the pound will continue depreciating based on the ongoing political uncertainty.