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10 Jun 2014
Pound to strengthen into H2 - Nomura
FXStreet (Bali) - GBP is likely to trade strongly into the second half of this year, Nomura notes.
Key Quotes
"The UK's economic growth momentum, led by the private sector, remains strong. Even though the external balance remains weak, foreign investment into the UK is accelerating, absorbing the deficits relatively easily."
"Historically, financing of external deficits has tended to be easy for the UK economy, when economic growth accelerates owing to the private sector. The gradual depletion of financial surpluses held by the private sector also suggests higher yields in the UK, which should attract foreign flows going forward."
"Our economic research expects the BoE to start hiking in November, which would support strong foreign flows into the UK."
"Housing market developments after the potential introduction of macro-prudential policy and political developments in the run-up to the Scottish independence referendum must be carefully monitored, but we think GBP is likely to trade strongly into the second half of this year."
"Divergence in monetary policy between the UK and euro area, on the back of different inflation momentum and the pace of depletion of economic slack, should send EURGBP lower. EURGBP looks set to test 0.80 sooner rather than later. We continue to recommend trading GBP from the long side against EUR and other European currencies with deflation risks, namely SEK and CHF."
Key Quotes
"The UK's economic growth momentum, led by the private sector, remains strong. Even though the external balance remains weak, foreign investment into the UK is accelerating, absorbing the deficits relatively easily."
"Historically, financing of external deficits has tended to be easy for the UK economy, when economic growth accelerates owing to the private sector. The gradual depletion of financial surpluses held by the private sector also suggests higher yields in the UK, which should attract foreign flows going forward."
"Our economic research expects the BoE to start hiking in November, which would support strong foreign flows into the UK."
"Housing market developments after the potential introduction of macro-prudential policy and political developments in the run-up to the Scottish independence referendum must be carefully monitored, but we think GBP is likely to trade strongly into the second half of this year."
"Divergence in monetary policy between the UK and euro area, on the back of different inflation momentum and the pace of depletion of economic slack, should send EURGBP lower. EURGBP looks set to test 0.80 sooner rather than later. We continue to recommend trading GBP from the long side against EUR and other European currencies with deflation risks, namely SEK and CHF."