As well as holidaymakers’ money going further against foreign currencies, importing goods from outside Britain will also become cheaper.
Oxford Economic claim sterling has been undervalued “on a wide range of valuation metrics”.
Analysts at Barclays believe the pound has been cheaper than a number of different currencies during the depths of the financial crisis and the International Monetary Fund bailout by Britain in the 1970s.
Finance experts Citi, Nomura and Barclays add that near record bets against the pound will begin to unwind if positive tones from the EU and Britain continue and US President Donald Trump has troubles implementing his proposed reforms.
The pound hit a one month high against the euro on Friday, trading at £1 to €1.17.
Sterling was up almost 1 per cent (0.98 per cent) from the close of trade on Thursday, and was the best performing currency in the G10 Space.
There has so far been little backlash in the immediate wake of Theresa May triggering Article 50 to star the official Brexit process on Wednesday, helping the pound to recover.
On Thursday, the Government published the Great Repeal Bill, which also helped give sterling a boost.
The bill sets out the Government’s approach to converting exiting EU law into domestic law on the day the UK leaves the European Union.
This gives more certainty to businesses, workers and investors, allowing them to better plan for a future outside the EU.
TorFX head of trading Adam Solomon said: “It’s got to the stage now where there has been that much negativity priced into the pound that any possible scenario of a compromise a Brexit bill will have the potential to prompt a corrective recovery.
“Suddenly, there is a sense of optimism that negotiations between the EU and the UK won’t be as fraught and some form of interim trade deal could materialise. If big banks start advising their clients to unwind short positions and start betting on the pound, the prospect of a move north of 1.20 will increase.”
