Synopsis:

Goldman Sachs suggests GBP long positions are attractive in the near term, particularly for investors looking to express a risk-on view. Positioning has turned incrementally more favorable, and valuation models support room for catch-up against the euro and other European currencies.

Key Points:

• Improved Sentiment on GBP:
  Positioning metrics show a net increase in long Sterling exposure over the past two weeks, outperforming other European currencies.

• Tactical Opportunity:
  Goldman sees GBP longs as viable risk-positive trades over the coming weeks, particularly as macro data stabilizes and volatility eases.

• Valuation Support:
  Sterling looks undervalued versus Goldman’s cyclical models, suggesting scope for GBP to catch up with the EUR and other regional currencies.

Conclusion:

With risk appetite returning, Goldman recommends short-term GBP longs, citing improved positioning and a favorable valuation backdrop. Sterling offers potential upside, especially as a relative value play within European FX.