The sterling turning point?

I’m fairly pessimistic about the prospects for sterling – or the GBPeso as some CoffeeHousers have dubbed it. But as a counterbalance to the stuff I’ve been posting recently, here is a forecast from Royal Bank of Scotland which reckons sterling has been oversold, the turning point has arrived and that we will be able to afford to go on holiday after all. Our pounds will be buying €1.20 by next Christmas and €1.30 by Christmas 2010, but we can forget about those $2 pounds. Here is its graph (below). RBS inverts things, and asks how many pence a Euro will buy. RBS reckons the BoE will cut rates to 1% by Easter and keep them there – but nonetheless argues sterling is “cheap by historic standards” and “eventually, this should tempt foreign investors to move back into sterling”. Here’s hoping.