Back
12 Mar 2013
Forex Flash: GBP decline would be welcome in UK – ANZ
The sterling’s recent weakness on the foreign exchanges remains in tact as an absence of fresh initiatives from the Bank of England and the lack of room to ease fiscal policy leave much onus on a weaker pound to help stimulate growth. The -1.2% decline in January industrial production, -3.5% MoM fall in January exports and -4.2% MoM drop in imports released today confirm the economy has started 2013 with a thud.
There is little objection to the pound’s slide and BoE deputy governor Tucker has implied a weaker exchange rate would be welcome – according to the ANZ Research Team, “we believe that the real exchange rate needs to fall, compared with where it was a few years ago, to get the necessary rebalancing in the economy. A profile of the UK’s core fundamentals (twin current account and budget deficits) and an absence of meaningful credit creation support GBP depreciation.”
There is little objection to the pound’s slide and BoE deputy governor Tucker has implied a weaker exchange rate would be welcome – according to the ANZ Research Team, “we believe that the real exchange rate needs to fall, compared with where it was a few years ago, to get the necessary rebalancing in the economy. A profile of the UK’s core fundamentals (twin current account and budget deficits) and an absence of meaningful credit creation support GBP depreciation.”