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UK: Sterling has been sold to new six-year lows - BBH

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 8, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Research Team at BBH, notes that the UK Sterling has been sold to new six-year lows yesterday.

    Key Quotes

    “The drop in oil prices, in the context of mostly disappointing UK data, reinforces ideas that the Bank of England will be unable to raise rates until much later in the year, at the earliest. To explain the heaviness of sterling, many observers are trying to make connections with the EU referendum later this year. We are not convinced that sterling would be trading much differently if there would be no referendum.

    Consider this. From early 2013 through Q3 2015, sterling appreciated almost 22% on the Bank of England's broad trade-weighted index. The decline in sterling over the past 4-5 months has seen the trade-weighted index ease by around 4.5%. This is to say, sterling's weakness against the dollar masks its still-elevated levels on a trade-weighted basis.”
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