Despite the warning from JPMorgan that the long position of the British pound is too high, its wide rally still turned Amundi SA from a bear to a bull.

The Europe's largest asset management company managing $2.3 trillion has turned to shareholding in the British pound in recent months, expecting it to rise further after reaching a one-year high. Andreas Koenig, global head of foreign exchange at the company, targets a high of 1.35 for the British pound against the US dollar by the end of the year, with the current trading price at around 1.29.

Amundi expects the British pound against the US dollar to continue to rise to 1.35.

Amundi joined the rush to buy the British pound, including Goldman Sachs, after the UK Labour Party led by Keir Starmer won by a significant margin, expecting the pound to rise due to the brighter prospects for the UK economy and the hope of political stability.

The view that the Bank of England's interest rate cut will be smaller than that of other central banks also provides support, making the pound set for its best performance since November in this month.

Koenig said: "The (UK) economic environment has improved and the government is relatively stable, so there are many reasons to support the pound. It may be a lower risk, and it may be a diversified option in the investment portfolio, which is favorable."

In sharp contrast to the calmness of the UK political situation, US politics witnessed dramatic twists and turns before the presidential election, and France also faced continued political crisis.

Since the beginning of this year, the pound has risen by nearly 1.5%, and the pound against the US dollar has exceeded all other G10 currencies of the same kind, and even broke through 1.30 last week. The pound against the euro is the strongest since August 2022, at around €1 to £0.84, and Amundi believes it will eventually rise further to £0.82.

Last year, Amundi was bearish on the pound, believing that as the UK economy fell into recession, the pound against the US dollar could fall to 1.21. Today, Koenig says that shareholding in the pound is its "core conviction."

The widespread optimism for UK assets has driven the pound's long position to a historic high, which JPMorgan believes is a risk for the pound in the near term. Nevertheless, JPMorgan still insists on its forecast that the pound against the US dollar will continue its recent rally and reach 1.35 by March next year.

In Koenig's view, the pound may be undervalued because investors cut back on investments in UK assets after Brexit.

He said that any dip is an opportunity for him to increase his long position in the pound against the US dollar and the euro, especially when the Bank of England starts cutting interest rates, a move that traders are betting may happen in September.

Koenig said: "The correction that may occur due to the start of a loose cycle may be a good buying opportunity. The pound against the US dollar has reached around 1.30, but if you look at the long-term chart, it is still relatively low."