David Bloom, Global Head of FX Research for HSBC, is none-too-impressed with suggestions the Great British Currency is more krona than sterling.
Here’s his short but scathing note on the matter:
GBP crisis: are you living in cloud cuckoo land?
There is no doubt the UK data is weakening a little more than expected and more than expected compared to the eurozone and the US data. However, the talk of a GBP crisis seems like hysterical clap trap.
Currencies are a relative concept. So who is the UK and GBP going to have a crisis against – the euro? The analysts that are putting the GBP crisis view are the very same analysts who seem to be simultaneously predicting the break up of the euro and a GBP crisis whilst only last year telling us the USD was finished and losing its reserve currency status.
I fail to see who this golden child is that GBP will have this crisis against. I get very worried when I find that I am the voice of reason. Ok let’s indulge in fear and assume a hung parliament – well some economists argued in a recent tit for tat letter that to tighten fiscal policy too soon would be a disaster for the UK economy. Well a hung parliament removes that risk. Of course if the UK goes into a double dipper whilst the whole world recovers, then GBP would fall and the export sector would boom. Is that a crisis or the normal transmission mechanism in action?
(H/T Bryce Elder)
Related links:
The Great British Peso – FT Alphaville
The Pru and the Great British Peseta – FT Alphaville
Vince Stanzione would like to recall “Pound Could Collapse Within Weeks” – FT Alphaville