| The outlook for sterling |
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| Written by Gary Howes | |
| Wednesday, 23 September 2009 14:36 | |
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"I don't believe that Euro / Sterling will move above parity." Stuart Frost, Threadneedle currency specialist, comments: “Sterling has once again slipped against the Euro. Although the Euro has yet to climb back up to previous highs, the current weakness of Sterling is largely down to the perception that UK interest rates will stay at lower levels for longer than its European counterparts. “Whilst a weak sterling does tend to help UK exporters, it’s important to remember that the UK is one of Europe's biggest importers. A strong Euro up against a weak pound does not help exporters into the UK, nor does it help import prices which will proportionally move up. “Personally, I don't believe that Euro / Sterling will move above parity and think we are likely to consolidate around the 0.85/0.95 range into 2010. Globally, interest rates are very low and at some point the UK market will start to anticipate the likely outcome of a general election. Already we’re seeing political parties in Britain talking about cuts in spending and the need to reduce the level of debt. This is a great concern to the financial markets and could easily undermine the value of sterling in future. “The US dollar is also clearly performing poorly against the Euro. Importantly, what differentiates this bout of sterling weakness from other bouts experienced earlier this year, is that sterling is holding up better against the US dollar. We are well off the lows seen at 1.3500 earlier in the year.” 
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| Last Updated ( Wednesday, 23 September 2009 14:39 ) |