The British Pound Is About To Take A Pounding

GREETINGS,

—-” The English pound and the American dollar have been the power and beckoning light of these two great powers. But when the world went off the gold and silver standard, the financial doom of England and America was sealed.

 The pound has lost 50 percent of its value. “–pg.87(THE FALL OF AMERICA)

Pound Faces Pain as Cameron Cuts Send King to Printing Press

The only major currency rivaling the dollar’s decline since July is the pound, and foreign-exchange strategists say the worst is yet to come for Britain’s legal tender.

Sterling has depreciated 5.1 percent against a basket of the nine other most-traded currencies, including last week’s 1.29 percent drop. Strategists are the most pessimistic on the pound versus the euro since the ruling Conservative-Liberal Democrat coalition came to power in May, according to data compiled by Bloomberg.

The decline suggests investors are losing confidence in Prime Minister David Cameron’s ability to restore growth while promising the deepest spending reductions in British history to shrink the biggest deficit in the Group of 20. His 81 billion pounds ($128 billion) of cuts through 2015 will force Bank of England Governor Mervyn King to print cash through so-called quantitative easing to prevent a new recession, overwhelming demand for sterling, according to UBS AG.

“There’s definitely more weakness to come,” said Hans- Guenter Redeker, global head of currency strategy in London at BNP Paribas SA. “The fiscal consolidation is going to hit the economy at a time when it’s slowing. Under these conditions, you need to have loose monetary conditions and that weakens the exchange rate.”

Redeker predicts sterling will drop to $1.40 by June. The currency traded at $1.5726 as of 3:53 p.m. in London.

Sell the Pound

UBS, the second-biggest currency trader after Deutsche Bank AG, recommended on Oct. 21 its clients sell the pound, especially against the Swiss franc, Australian dollar and Norwegian krone. Morgan Stanley strategists said it may weaken to 93 pence per euro from 88.96 pence today should the recovery slow further or Bank of England policy makers signal more credit-easing measures.

This week’s report on third-quarter gross domestic product “will be key in the Bank of England’s decision of whether to undertake QE or not in November,” London-based Morgan Stanley strategists Tim Davis and Calvin Tse wrote in an Oct. 21 report….MORE HERE

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