Pound could shrink to $1.28, currency expert warns

mzqa395

Sterling could drop to $1.28, its lowest level since 1985, and to 92p per euro in early 2009, according to Paul Meggyesi, a currency strategist at JP Morgan.
"The UK may not be Iceland but the temperature is certainly dropping," he said in a note to clients. "We take an axe to our pound forecasts to reflect the risk of continued bank deleveraging."
Most currency strategists agree that the pound will continue to fall as the UK enters a deep recession. Sterling has also been hit further since the Bank of England opened the door to more big rate cuts when it published its quarterly inflation report last week.
On Monday the pound bucked the trend however, rising 1.5 cents against the dollar to $1.4982, and strengthening 1p to 84.38p against the euro.
Analysts said that sterling bounced after a big sell-off last week prompted by comments made by the Bank's Governor Mervyn King and the dismal prospects for the UK economy, which dragged the pound down to around $1.48 and 85.52p against the euro.
The bounce was an indication that claims made by shadow chancellor George Osborne over the weekend that the Government's borrowing plans will lead to a "run" on the pound were ignored the by the market.
"If you look at how sterling is trading, most of the damage was done before he opened his mouth, and although the spat continued over the weekend, we haven't really seen more pressure (on the pound)," said Steve Barrow, a currency strategist at Standard Bank.
However, Mr Barrow is among those currency experts who believe sterling remains vulnerable over the short-term.
The FTSE 100 fared less well on Monday, closing down 2.4pc or 101.8 points at 4132.16. The Dow, having fallen 250 points at one stage, recovered in late trading to show a 45 point gain at 8543.5.

http://www.telegraph.co.uk/finance/economics/3473846/Pound-could-shrink-to-1.28-currency-expert-warns.html

gozomark

Most currency strategists agree that the pound will continue to fall as the UK enters a deep recession.

As with all markets, the more that predict it, the less likely it is to happen, as investors/traders will already be positioned

Ephemera

gozomark wrote: »

Most currency strategists agree that the pound will continue to fall as the UK enters a deep recession.

As with all markets, the more that predict it, the less likely it is to happen, as investors/traders will already be positioned

Oh, if only that had happened with house prices, eh?

oshoshitzu

http://www.ft.com/cms/893ac9c8-757e-11dc-b7cb-0000779fd2ac.html?_i_referralObject=929363526&fromSearch=n

gozomark

Ephemera wrote: »

Oh, if only that had happened with house prices, eh?

well you try selling a house now - the clearing price for a forced seller is probably close to the bottom.

what moves markets is unexpected events, not expected ones

The bounce was an indication that claims made by shadow chancellor George Osborne over the weekend that the Government's borrowing plans will lead to a "run" on the pound were ignored the by the market.

not ignored, but already discounted

purch

Mr Barrow is among those currency experts

I thought the City had got rid of all the Barrow Boys in the 1990's !!!!

The bounce was an indication that claims made by shadow chancellor George Osborne over the weekend that the Government's borrowing plans will lead to a "run" on the pound were ignored the by the market

It's not like the Conservatives to be following events rather than leading them !!!! :rotfl:

Jonbvn

AFAIK, not one of these "experts" foresaw the recent 30% drop in sterling against the US$.

I have given up listening to such expert predictions. You might as well ask Gypsy Rose-Lee for her predictions, since in the current climate they are just ask likely to prove correct.

gozomark

Jonbvn wrote: »

AFAIK, not one of these "experts" foresaw the recent 30% drop in sterling against the US$.

there are enough experts out there that I'm sure atleast one predicted it - monkeys and typewriters

Reaper

I have to say I agree with you Jonbvn. I have noticed over the years that the majority of highly paid pundits prediction of the future seems to be based on what has happened in the recent past. When markets/currency are rising they say they will carry on going up. When they fall they say they are going to carry on going down.

It's like the weather forecaster that says if it rains today it will rain tomorrow.

macca64

I also agree with Jonbvn, take oil for example, when it was $140 the experts were saying it was going to $200, once it had fell to $100 they were all saying $50. I think you may as well take a wild stab in the dark yourself.

eeja

Jonbvn wrote: »

AFAIK, not one of these "experts" foresaw the recent 30% drop in sterling against the US$.

I have given up listening to such expert predictions. You might as well ask Gypsy Rose-Lee for her predictions, since in the current climate they are just ask likely to prove correct.

This is not accurate . I receive the Saxo Bank daily report and for weeks before it happened, they were saying this would happen and surprised at the strength of sterling and why it had not yet fallen sharply.
Predicting currency movements is NOT Gypsy Lee stuff .#
The experts often predict the fall of a currency based on fundamentals