The Great Debate UK

Sterling destined for safe haven status (at least in the short term)

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–Torben Kaaber is CEO of Saxo Capital Markets UK. The opinions expressed are his own.–

Sterling may not be a currency that investors immediately associate with safe haven status. Typically, safe havens in the currency world have been the triad of the U.S. dollar, the Swiss franc and the Japanese yen.

But a recent convergence of economic factors means that sterling is becoming a focal point for investors. While many pundits in the marketplace have been bearish around the recent rise in sterling, predicting a bumpy landing, I believe the currency will stay strong for the foreseeable future, and here’s why.

Though a long period of lacklustre economic performance and austerity uncertainty has seen the UK lag behind most of the world’s major economies, falling unemployment, GDP acceleration and improving public finances are now boosting confidence, along with the increasingly neutral stance of the Bank of England.  In November, the Office for National Statistics found that the economy grew 0.8% in Q3 2013, its fastest pace for three years and faster than the rest of the west.

Thanks, Greece

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–Laurence Copeland is a professor of finance at Cardiff University Business School. The opinions expressed are his own.–

The euro zone crisis has been a piece of luck for Britain. Imagine what would have happened without it.

Thank you, Gordon Brown

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BRITAIN-INFLATION/–Laurence Copeland is a professor of finance at Cardiff University Business School. The opinions expressed are his own.–

If the economics profession has sunk in public estimation in the last two or three years, it would hardly be surprising. Our failure to predict the crisis is something which cannot be simply brushed aside lightly, as some of my colleagues would love to do.

Bank of England Inflation report offers markets a reality check

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-Mark Bolsom is Head of the UK Trading Desk at Travelex Global Business Payments. The opinions expressed are his own.-

Sterling tumbled to a one week low against the dollar in trading this morning, after the Bank of England delivered its latest quarterly inflation and growth forecasts today.

Sluggish U.S. economy may threaten UK business development

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- Paddy Earnshaw is the Director of Customer Relations at Travelex Global Business Payments. The opinions expressed are his own.-

British importers and exporters’ confidence in the economy leapt in July, as positive economic data fuelled hopes for a return to strong economic growth. According to the Travelex Confidence Index (TCI), which jumped 12 points in July to 116, from 104 in June, strong gains were driven by quarter 2′s GDP figure, as it showed the UK grew at its fastest pace in four years.

Eerie calm before Britain’s election

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– James Saft is a Reuters columnist. The opinions expressed are his own –

To look at sterling and gilts, you would hardly know that Britain is sailing into a general election which will likely deliver a weaker government with a diminished ability, if not will, to grapple with high debts, an uncertain role in the global economy and an aging population.

Better public finance data may be sterling Trojan horse

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Jane Foley
- Jane Foley is research director at Forex.com. The opinions expressed are her own.-

Finally UK monthly public finance data has brought better than expected news.  Not only was the net borrowing figure for February  better than expected but the January data was revised lower from 4.3 billion pounds to just 43 million pounds, taking the total for the fiscal year to date 131.9 billion pounds.

Cable: parity is still a long way off but $1.40 beckons

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Jane FoleySince 1982, cable has been contained by the 1985 low of GBP/USD1.0790 and the 2007 high of USD2.0798.  The bulk of this time cable has remained within a narrower 1.40 to 1.80 trading range.

These statistics illustrate how significant it would be if the pound were to slip to parity with the dollar this year.  They have not, however, stopped some commentators speculating about such an event.

Can inflation be controlled by raising interest rates?

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MarkBolsom-150x150.jpg- Mark Bolsom is the Head of the UK Trading Desk at Travelex, the world’s largest non-bank FX payments specialist. The opinions expressed are his own.-

One of the Bank of England’s Monetary Policy Committee members, Andrew Sentance, was quoted this morning suggesting that the Bank of England will need to consider raising interest rates this year if a “recovering economy poses a threat to inflation.”

A tough spring in store for the pound

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foley- Jane Foley is research director at Forex.com. The opinions expressed are her own.-

The pound has started the year on a negative note.  Ongoing concerns over the budget deficit, an impending general election, the prospect that the Bank of England (BoE) may yet increase quantitative easing (QE) and a drop in consumer confidence are all clouding the outlook.

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