9 Jan 2015
GBP selling seems excessive - BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ, finds GBP’s current 3% decline against the Dollar as excessive, and predicts EUR/GBP to continue to fall till euro remains pressurized against the dollar.
Key Quotes
"Last year the pound dropped by 6% versus the dollar but is already down a further 3% in the first five trading days of the new year. Easing rate hike expectations on falling inflation, falling crude oil prices and concerns over growth in Europe help explain last year’s decline but it is harder to justify the further sell-off so far this year and we see a chance of EUR/GBP falling if EUR/USD remains under downward pressure."
"This morning the KPMG/REC wage survey for December showed temporary and permanent hiring accelerating to 60.1 and 59.0 respectively – both considerably above the 50.0 level that signals stagnant growth."
"The implication of this of course is that the UK consumer, experiencing faster nominal wage growth is set for a healthy gain in real wages due to falling energy prices that should keep the UK economy growing robustly."
"We do assume some pound weakness as the general election approaches but in the meantime we see increasing risks of a break lower in EUR/GBP."
Key Quotes
"Last year the pound dropped by 6% versus the dollar but is already down a further 3% in the first five trading days of the new year. Easing rate hike expectations on falling inflation, falling crude oil prices and concerns over growth in Europe help explain last year’s decline but it is harder to justify the further sell-off so far this year and we see a chance of EUR/GBP falling if EUR/USD remains under downward pressure."
"This morning the KPMG/REC wage survey for December showed temporary and permanent hiring accelerating to 60.1 and 59.0 respectively – both considerably above the 50.0 level that signals stagnant growth."
"The implication of this of course is that the UK consumer, experiencing faster nominal wage growth is set for a healthy gain in real wages due to falling energy prices that should keep the UK economy growing robustly."
"We do assume some pound weakness as the general election approaches but in the meantime we see increasing risks of a break lower in EUR/GBP."