Tuesday, Dec 23, 2008
FT Alphaville - Great (British Pound) Expecations
FT Alphaville: Great (British Pound) Expecations
Is GBP oversold and ready to bounce back?
- "A glimmer of light on the horizon for the Great British Krona — currently suffering from record lows on a trade-weighted basis? Bank of America seems to think so, at least relative to the USD... The 2-year swap rate differential suggests a GBP/USD rate closer to 1.60 than the current rate under 1.48"
GBP may be oversold because there is still uncertainty about whether the BoE goes into Quantitative Easing or not.
Posted by mountain goat @ 09:50 AM (474 views) Add Comment
3 Comments
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1. bellwether said...
The problem as I see it is that no-one knows what to hold and there is a flight to daddy ie USD and to an extent the Euro.
I also think it is just about impossible to value currency beyond general trends as so much depends on unknown and impossible to predict variables. Certainly to call a precise fair value at a particular figure is absurd.
I think Sterling will continue its downward trajectory against the USD and Euro for a while yet (but not against other currencies) with interest rates to come down and a lot of bad news out there. We are also behind the US on housing crash. Parity with the Euro will be reached as a minimum and we will go substantially below the $1.44 low for the USD ie putting some savings into other currencies still a worthwhile venture in my view. Currency can trade in a trend for a long time at rates that are fundementally flawed eg £1 being = 2USD last year
I think £ will begin to recover against the Euro first, and possibly quite soon. There is a lot of terrible news that is simply not being priced into the euro.
2. greytornado said...
As nothing else is working - the Government will be drawn to the idea of quantative easing; just like a moth is drawn to the light. They will get the presses working flat out very soon. But this is a dead cert way to bring on the wheelbarrows...........................................
3. crunchy said...
The pound will bounce back on some bad news elsewhere.
I have seen this happen so many times before.
I am waiting to see what that news will be and where it will come from.
The pound is not know as the "beast" for no reason. lol