The British Pound; Are Investors Also Leaving ?
Posted: Fri Aug 10, 2018 3:47 am
HSBC on British Pound Outlook: Investors Might be "Leaving and not Coming Back", Could Yesteryears Highs vs. Euro and Dollar be Consigned to the Past?
Thursday, 09 August 2018 12:40
HSBC exchange rate forecast
- HSBC warn of a "tectonic" shift could be underway for Sterling
- Long-term demand for UK assets may be hit as investors "go away and don't come back"
- Markets even more pessimistic than pessimistic Bank of England
A structural shift away from the British Pound may be happening warns an HSBC economist who suggests much of the weakness displayed by the currency of late might be irreversible.
Pound Sterling is down 1.25% against the Euro and US Dollar over the course of the past give days as fears continue to simmer that the UK will tumble out of the EU on a 'no-deal' basis.
The slide in Sterling comes despite the the Bank of England (BoE) raising interest rates at last Thursday's policy meeting - a move typically associated with a rise in the currency.
Higher rates usually attract greater inflows of foreign capital with the promise of higher returns, thus boosting the currency in the process, however, due to anomalous risks associated with Brexit the opposite may in fact be happening.
Sterling has failed to move higher after the rate hike and instead has fallen to multi-month lows as Brexit fears have clouded the outlook.
And, the adjustment may be indicative of far-reaching developments in currency markets which could affect the Pound for years to come, according to one strategist.
Longer-term holders of the currency such as central banks and large sovereign funds may actually be reducing their Sterling reserves on a semi-permanent basis, as they did the Euro during the Eurozone debt crisis.
"Perhaps there are investors who are exiting Sterling. They are leaving and not coming back. So that is the challenge for Carney and the BoE - they are seeing a structural shift away from the currency and the market," says Steven Major, head of global fixed income at HSBC.
The Pound-to-Euro exchange rate is seen hovering at the bottom of a long-held range between 1.11 and 1.15 as markets break with the assumption that an amicable pro-business Brexit deal will be reached. The Pound-Dollar exchange rate meanwhile continues its resolute trend lower, showing very little respect for technical support levels.
https://www.poundsterlinglive.com/gbp-l ... bc-warning
Thursday, 09 August 2018 12:40
HSBC exchange rate forecast
- HSBC warn of a "tectonic" shift could be underway for Sterling
- Long-term demand for UK assets may be hit as investors "go away and don't come back"
- Markets even more pessimistic than pessimistic Bank of England
A structural shift away from the British Pound may be happening warns an HSBC economist who suggests much of the weakness displayed by the currency of late might be irreversible.
Pound Sterling is down 1.25% against the Euro and US Dollar over the course of the past give days as fears continue to simmer that the UK will tumble out of the EU on a 'no-deal' basis.
The slide in Sterling comes despite the the Bank of England (BoE) raising interest rates at last Thursday's policy meeting - a move typically associated with a rise in the currency.
Higher rates usually attract greater inflows of foreign capital with the promise of higher returns, thus boosting the currency in the process, however, due to anomalous risks associated with Brexit the opposite may in fact be happening.
Sterling has failed to move higher after the rate hike and instead has fallen to multi-month lows as Brexit fears have clouded the outlook.
And, the adjustment may be indicative of far-reaching developments in currency markets which could affect the Pound for years to come, according to one strategist.
Longer-term holders of the currency such as central banks and large sovereign funds may actually be reducing their Sterling reserves on a semi-permanent basis, as they did the Euro during the Eurozone debt crisis.
"Perhaps there are investors who are exiting Sterling. They are leaving and not coming back. So that is the challenge for Carney and the BoE - they are seeing a structural shift away from the currency and the market," says Steven Major, head of global fixed income at HSBC.
The Pound-to-Euro exchange rate is seen hovering at the bottom of a long-held range between 1.11 and 1.15 as markets break with the assumption that an amicable pro-business Brexit deal will be reached. The Pound-Dollar exchange rate meanwhile continues its resolute trend lower, showing very little respect for technical support levels.
https://www.poundsterlinglive.com/gbp-l ... bc-warning