The Underperformance of the British Pound

November 14, 2007

The big story of the day is the British pound - fundamental factors are becoming less supportive of pound strength. To the surprise of the market, the Quarterly Inflation report revealed a divided central bank that revised its 2008 GDP forecasts from 2.7 percent down to 2.4 percent which is a big change. They felt that even though commodity prices presented upside risks, the uncertainties surrounding inflation and growth are increasing. Bank of England Governor King forecasted more difficult times ahead in the financial markets on the heels of a $3.4 billion charge taken by HSBC on their bad loans. We expect the British pound to continue to underperform the Euro.

Posted in Bank of England, British Pound