GBP (British Pound)

United Kingdom 02 (Jan 12 to Dec 16)

Postby behappyalways » Sat Oct 15, 2016 7:41 pm

Sterling: Taking a pounding

The fall in sterling hints at how painful a “hard” Brexit would be


RARELY do people compare the British pound to the Nigerian naira, Azerbaijani manat or Malawian kwacha. But on a measure of year-to-date change against the American dollar, sterling is near the bottom of the 154 currencies tracked by Bloomberg.

The pound is down by 15% on a trade-weighted basis since the Brexit vote, and is plumbing the depths it reached in the 2008-09 financial crisis (see Buttonwood).

The cause of sterling’s fall is the realisation that Theresa May’s government is moving towards a “hard” Brexit, which involves Britain leaving the European Union’s customs union and its single market. It is also driven by the fear that Britain is turning into a xenophobic, interventionist and unpredictable place, with calls to clamp down on foreign workers and foreign capital.

For a country that is used to attracting swathes of investment from abroad because of its membership of the single market and stable political climate, this is a huge shift.

With Britain’s current-account deficit (a measure of what it borrows from abroad) equal to a gigantic 6% of GDP, it is also a dangerous one. True, Britain is not heading for a balance-of-payments crisis. Its debts are issued in its own currency, so the cost of meeting its obligations will not soar as the currency falls.

And Britain’s net capital flows tend to come in the form of foreign direct investment (FDI), as opposed to deposits or short-term debt. FDI will not disappear overnight in the way that deposits could. But it can be hard to recover from a loss of confidence. If foreign investment dries up, and the pound stays weak, Britons will be left permanently poorer.

The penny needs to drop, too

Unfortunately, far too many in Mrs May’s government are complacent about this. Many Brexiteers wrongly conclude that the pound’s slump is nothing but good news. Their argument is that a weaker pound will send exports soaring, herald a manufacturing renaissance and “rebalance” the economy away from services.

Yet recent experience suggests that British exports do not respond quickly or strongly to a cheaper currency. The volume of exported goods is actually lower than it was before the Brexit vote. Exporting requires importing of supplies and other materials, and these are now more expensive. Within just a few weeks the year-on-year change in producer prices has neared 10%, the highest since 2011.

The Brexiteers also fail to acknowledge the immediate hit to living standards that the pound’s slump has caused. Britons enjoy consuming things from abroad. Some 5% of household spending goes on foreign holidays. Domestic prices are affected, too: the pressures surfaced this week in a dispute between Tesco, a supermarket, and Unilever, a consumer-goods firm, which wants to increase the price of brands such as Marmite, a yeasty spread. Inflation may jump from its current level of 0.6% to 3% by next year, well above the Bank of England’s 2% target.

This will be bitter medicine for the average Briton, whose real weekly pay is already about 4% lower than in 2007. Nominal wage growth fell to a measly 2% in the run-up to the referendum, and bosses are in no mood to offer pay rises now. Real wages will soon be falling once again.

The combination of a slowing economy, rising inflation and shaky confidence constrains fiscal and monetary policy. The Bank of England is unlikely to raise interest rates in response to the temporary spurt of inflation caused by sterling’s fall. Yet gone are expectations that the bank will soon reduce the base rate of interest from 0.25% to 0.1%; a cut would prompt still more foreign capital to leave the country.

The government may have a little room for manoeuvre. In its autumn statement, it is likely to change course from aggressive fiscal consolidation to mild expansion. But it, too, must be careful. Gilt yields have crept upwards as investors reassess the British economy, and could go a lot higher if the nasty rhetoric coming from ministers continues.

The most sensible course, then, would be to heed markets’ concerns. The overwhelming weight of evidence shows that leaving the customs union and single market would exact a heavy toll on Britain’s economy. Remaining within them would require political courage, but has clear economic benefits. It is not too late to change course.

Source: The Economist
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Re: GBP (British Pound)

Postby winston » Mon Oct 17, 2016 8:09 pm

Goldman Sachs has 5 reasons why the British pound is in for more pain

By Victor Reklaitis

Cumulative drop of 25% against the buck seen by year’s end

Source: MarketWatch

http://www.marketwatch.com/story/goldma ... yptr=yahoo
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Re: GBP (British Pound)

Postby winston » Fri Oct 21, 2016 10:28 am

Here’s a unique way to make money from the British pound’s historic plunge

By Simon Black

One asset class that makes sense to consider is collectibles, things like rare coins or wine.


Right with the British pound at around $1.22, luxury watches being sold in London and priced in pounds can be had at a steep discount to their US dollar prices across the ocean.


Source: Sovereign Man

http://www.thetradingreport.com/2016/10 ... ic-plunge/
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Re: GBP (British Pound)

Postby winston » Mon Oct 24, 2016 8:39 am

Pound’s Uncomfortable Truce Can’t Mask the Risk of Abrupt Swings

by Lukanyo Mnyanda

Because we’ve arrived here so early, and because the news flow is likely to be bad, we’ll occasionally get periods where there’s a loss of confidence. We could still get abrupt moves.”


And though the $1.25 median year-end prediction is now stronger than the exchange rate, that reflects how difficult it’s been for strategists to keep pace with sterling’s slide, rather than optimism about a bounce.


Source: Bloomberg

http://finance.yahoo.com/news/pound-unc ... 00632.html
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Re: GBP (British Pound)

Postby winston » Mon Nov 28, 2016 8:19 am

Calmer time seen for pound

LONDON: After a torrid few months, the omens are lining up for a calmer time ahead for the pound.

Sterling volatility, which surged to a post-financial-crisis high after Britain voted to leave the European Union (EU), has fallen to the lowest since early October. The pound has retraced some of its post-Brexit losses and is the only currency to have risen versus the dollar this month.

The economy is also helping, with robust consumer spending helping to offset official predictions for a slowdown next year as well as concern that the government will have trouble meeting its target of pulling the EU exit trigger by March.

And Donald Trump is having an effect: his election as US president, together with rising political risks across Europe, are giving traders something else to focus on other than Britain quitting the bloc.

“We have priced in a lot of bad news and Brexit fears, and now it’s wait and see,” said Sonja Marten, head of currency strategy at DZ Bank AG in Frankfurt. “The positive view on the economy helps.”

Source: Bloomberg
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Re: GBP (British Pound)

Postby winston » Wed Nov 30, 2016 6:35 am

Buy sterling on weakness

BY K.M. LEE

KUALA LUMPUR: The British pound sterling had a good run the past month, tracking the upward thrust in the US dollar index on renewed buying interest, as some major currency players began to argue the market had already priced-in the risks related to the messy exit from the European Union.

The positive momentum in the sterling was further boosted by a more upbeat tone and growth-supportive moves from the British government’s Autumn Statement on the budget recently.

According to the UK pound sterling/Malaysian ringgit FX Cross rate chart, the former currency rose from the recent lows of 5.0197 on Nov 25 to as high as 5.5851 against the latter currency on Monday before pausing owing to an apparent profit-taking activity.

It was trading little changed at 5.5263 this morning.

The steady appreciation of the sterling recently witnessed the currency breaching the uppermost 200-day simple moving average (SMA) line on Nov 22, also the first time in 10 months, and it charged forward to penetrate the one-year-old bearish descending trendline briefly on Monday.

Though the sterling bulls had paused for air apparently, the positive breakout on the chart theoretically may spell more weakness for the ringgit going forward, with great volatility in crude oil prices weighing on the sentiment.

Turning to the indicators, the oscillator per cent K curved down from the top and dropped below the oscillator per cent D of the daily slow-stochastic momentum index to trigger a short-term sell at the overbought area.

Also on the slide, the 14-day relative strength index retraced from a reading of 88 on Nov 21 to a low of 73 points this morning.

In stark contrast, the daily moving average convergence/divergence histogram retained a comfortable posture above the daily signal line to keep the bullish note. It had issued a buy call on Oct 28.

Technically, the pound sterling is poised to slip into correction mode in the short-term, but it is expected to resume the rally once the present overbought condition is fully neutralised.

This may mean that for those who have an interest in the pound sterling, whether for hedging or investors, can consider buying on weakness.

Initial support for the pound is seen at 5.510, which is the 200-day SMA.

A crack of the lower 14-day SMA of 5.4674 will drag the sterling down to the 21-day SMA of 5.3772.

To the upside, a successful breakout of the recent peak of 5.5851 will signal a bullish turnaround, enroute to the 5.7427 barrier in the near-term.

The next upper hurdle is resting at the 5.8927 and heavy resistance is set at the 6.000-6.0615 band.

Source: The Star
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Re: GBP (British Pound)

Postby winston » Tue Dec 20, 2016 1:54 pm

Deutsche Bank's Five Reasons Why the Pound Is Overvalued

by Sid Verma

Source: Bloomberg

http://finance.yahoo.com/news/deutsche- ... 00121.html
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Re: GBP (British Pound)

Postby behappyalways » Tue Jan 03, 2017 7:18 pm

The UK releases their new £1 coin, looks just like the S’pore $1 coin
http://mothership.sg/2017/01/the-uk-rel ... re-1-coin/
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Re: GBP (British Pound)

Postby winston » Wed Jan 25, 2017 10:47 am

vested

I cant resist a hated investment

Source: Daily Crux

http://thecrux.com/sjuggerud-i-cant-res ... a-new-one/
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Re: GBP (British Pound)

Postby winston » Thu Jan 26, 2017 7:28 pm

Pound Risks Becoming Irrelevant as Brexit Dims Reserve Status

by Liz McCormick

Deutsche Bank says the pound’s role as a buffer diminished
Currency reserve managers seen slowly moving away from pounds

The British currency’s share of global reserves has fallen for the last two quarters to 4.5 percent, according to the most recent International Monetary Fund quarterly Composition of Official Foreign Exchange Reserves report -- dubbed as COFER data -- which runs through Sept. 30.

The U.S. dollar holds the largest slice at 63.3 percent, followed by the euro with 20.3 percent.


Source: Bloomberg

https://www.bloomberg.com/news/articles ... rve-status
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