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12 Mar 2013
Fundamental Afternoon Wrap: Pounded
This afternoon´s institutional research has one target very firmly in its cross hairs today... Sterling. Poor economic data has lead the currency to continue to weaken today and many analysts feel that further easing and a change to the BoE´s mandate are on the near term horizon, and combined with poor economic data, there is little reason to buy GBP at the moment.
GBP
ANZ analyst Brian Martin notes that sterling's weakness remains in tact as an absence of fresh initiatives from the BoE and the lack of room to ease fiscal policy leave much onus on a weaker pound to stimulate growth. He notes that there is little objection to pounds slide as issues like the UK´s EU membership continue to overhang on the currencies prospects. At present, he sees very few reasons to buy sterling. Marc Chandler of BBH asks the question of whether the UK is willing to go where Japan daren´t and amend the BoE´s mandate. He suspects that under a more activist Carney, the Bank will be given more powers to allow for more inflation and target setting as an offset to the Government's austerity drive.
Meanwhile Catherine Stephan of BNP Paribas notes that today´s UK economic data has been poor and mainly due to weak global economic growth and to a lesser extent bad weather conditions. TS Securities analysts note that It didn’t seem like it could get much worse for the GBP after the threat of a triple dip recession, a rating downgrade, and the ’open mouth’ BoE policies drove an almost uninterrupted slide since the turn of the New Year, totaling 8% against the dollar. They feel that a pending rate cut is very possible and that next week's budget will be closely watched and considered a risk. Nick Bennenbroek adds that Sterling has fallen today to its lowest level since 2010 following poor data.
GBP
ANZ analyst Brian Martin notes that sterling's weakness remains in tact as an absence of fresh initiatives from the BoE and the lack of room to ease fiscal policy leave much onus on a weaker pound to stimulate growth. He notes that there is little objection to pounds slide as issues like the UK´s EU membership continue to overhang on the currencies prospects. At present, he sees very few reasons to buy sterling. Marc Chandler of BBH asks the question of whether the UK is willing to go where Japan daren´t and amend the BoE´s mandate. He suspects that under a more activist Carney, the Bank will be given more powers to allow for more inflation and target setting as an offset to the Government's austerity drive.
Meanwhile Catherine Stephan of BNP Paribas notes that today´s UK economic data has been poor and mainly due to weak global economic growth and to a lesser extent bad weather conditions. TS Securities analysts note that It didn’t seem like it could get much worse for the GBP after the threat of a triple dip recession, a rating downgrade, and the ’open mouth’ BoE policies drove an almost uninterrupted slide since the turn of the New Year, totaling 8% against the dollar. They feel that a pending rate cut is very possible and that next week's budget will be closely watched and considered a risk. Nick Bennenbroek adds that Sterling has fallen today to its lowest level since 2010 following poor data.