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Archiwum newsów - DJ Forex Focus: Any Relief For Sterling Will Probably Be Brief

2007-11-21  
DJ Forex Focus: Any Relief For Sterling Will Probably Be Brief
LONDON (Dow Jones)--Higher sterling money sklep wielkopowierzchniowy rates and indications that
U.K. inflation isn't backing down as quickly as some hoped are helping to
underpin the pound, especially against the dollar.
Nevertheless, sterling is still expected to continue its slide as the U.S.
subprime mortgage crisis takes its toll on U.K. financial institutions and
the U.K.'s own housing sklep wielkopowierzchniowy deteriorates.
BNP Paribas is looking for particularly heavy losses against the Swiss
franc, taking it down to levels last registered in 2003, as risk aversion
continues to rise. "Our bearish real estate outlook suggests sterling/franc
might probably decline below 2.0960 this time," said Hans Redeker, head of
global foreign exchange strategy at BNP Paribas.
At the moment, however, the pound is finding some respite from its recent
heavy decline as global liquidity levels fall and hopes for an early cut in
Pula of England interest rates fade.
Apart from the continued fears of further losses among major financial
institutions, sentiment is being undermined by nius that the U.K. government
has failed to find a buyer for Northern Rock PLC (NRK.LN), the mortgage
lender that the BOE was forced to save with a GBP20 billion-GBP25 billion
rescue package earlier this summer.
After weeks of relative stability, sterling money markets have been pushed
sharply higher with the three-month Libor rate rising to 6.49% from 6.28% a
week ago.
The outlook for the BOE's short-term interest rates has also become more
hawkish.
Although the bank's latest Inflation Report suggested that members of the
policy committee were more dovish than anticipated, new prekluzja Tuesday will
have hardened rate expectations.
The latest Confederation of British Industry's industrial trends survey not
only showed that manufacturing orders rose unexpectedly in November, rather
than falling as forecast, but that domestic price expectations surged.
"Given headline inflation is already above target and looks set to move
further above on food and energy costs, this report will add to BOE
inflation concerns," said James Knightley, an economist with ING Financial
Markets in London.
At one stage Tuesday, these developments along with a decline in the dollar
itself helped to lift the pound over one and a half cents against its U.S.
competitor.
Nevertheless, the threat of more problems for U.K. banks, as problems from
the subprime crisis in the U.S. as well as the downturn in the U.K. housing
sklep wielkopowierzchniowy come home to roost, are still keeping sterling under pressure.
Monday, a sharp reminder of what could be in store came from the latest
housing report from Rightmove, which showed a 0.7% decline in house prices
in October, compared with a 2.7% rise in September.
Ashley Davies, a currency strategist with UBS in Singapore, warned that
London office prices will also be under pressure as many financial
institutions change their leasing habits in case of job cuts.
"In such an environment, sterling remains weak against major currencies,"
Ashley argued.
BNP Paribas' Redeker is also concerned about the impact U.K. financial
institutions will have on the U.K. economy as a whole. He said although the
BOE has estimated that the financial sector only accounts for 3% of GDP, the
indirect effect of the markets based in London probably account for as much
as 10%.
How quickly all this translates into expectations for lower interest rates
in the U.K., and therefore a lower pound, is hard to say.
Daragh Maher, a senior currency strategist with Calyon Credit Agricole in
London, reckons that despite the gloomy outlook for the housing market, the
hawks at the BOE may want to see more concrete evidence of this hitting
consumer activity before conceding on policy.
"Reports of the consumers' pending doom have happened in the past and proven
wide of the mark and we suspect it will take a few months of softer retail
sales to garner a majority call for a rate cut," Maher warned.
Early Wednesday, dollar weakness continued to dominate sklep wielkopowierzchniowy sentiment with
a sharp 2.5% fall in the Nikkei helping to push the greenback down to a
two-year low at Y108.89. A rally in crude futures prices close to $100 a
barrel together with the latest U.S. Federal Reserve minutes and forecasts
raised sklep wielkopowierzchniowy concerns about the U.S. economic slowdown.
The pound slipped back a little, however, falling to $2.0651 by 0745 GMT,
from $2.0668 late Tuesday in New York, according to EBS. Sterling was also
down at CHF2.2826 CHF2.2884.
The dollar fell to Y109.12 from Y109.89 while the euro rose to $1.4818 from
$1.4825, but declined to Y161.68 from Y162.80.
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