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Sterling will be strongest major currency in 2011, says Barclays Watch

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    Sterling will be the best-perfoming major currency next year, Barclays has forecast, as the UK gets its "house in order".


    The prediction came as Barcap, the securities arm of the retail bank, also used its 2011 outlook to predict that stock markets will outperform government bonds and that the US economy will stage a stronger recovery than it has managed in 2010.




    The pound, which has been hard hit since the financial crisis, will end next year at $1.82 against the dollar and 78p versus the euro, it was estimated. The currency closed on Thursday in London at $1.5728 and 84p.




    The UK currency's performance will be matched by a strong showing for the FTSE 100, according to Barcap, which expects the index to rise by about 18pc next year and offer a further 4pc return in dividends. The bank's hopes for the London market come from performance in the rest of the world, rather than the UK.



    http://www.telegraph.co.uk/finance/c...-Barclays.html
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    Eugh, not you again. If you get any further up bankers' ****s you'll be coming out their ears.
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    I think your two neg reps for that post pretty much sums up anything I could respond with.
    • Political Ambassador
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    Make it 3.....
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    The problem with some of these types of articles, its usually the tabloids who do it, is they aim it at the non-economic audience by using the terms like 'stronger or weaker pound', sometimes justifying it by the simple argument that 'your pound will go further on your summer holidays', to try and suggest a currency which has a high exchange rate against others, is a good thing, and a currency which has a lower exchange rate, is a bad thing.

    In the current global climate most of the bigger economies are trying to push down the value of their currencies. The Chinese government has been intervening in the currency markets for ages to artificially push down the value of the yuan, because thats what gives them a competitive advantage in making Chinese exports cheap. The US are always complaining about this saying China should let its currency rise. Then you get Germany, they are getting the short end of the stick having to cough up money to bail out the basketcase European economies...why don't the Germans say stuff the Euro lets get the Deutschmark back..? Because they know that the Mark would be far far higher value than the Euro, they like the benefits of having an undervalued currency, for helping German goods take a dominant position in the export market, so they are taking advantage of the fact they share a currency with a load of struggling economies so investors don't want to buy it as much as they would the Mark.

    I am not too bothered about sterling performing 'strongly' or 'weakly' I would rather we had an environment of relative exchange rate stability because that's what will encourage investment.

    As for a prediction like this:
    The pound, which has been hard hit since the financial crisis, will end next year at $1.82 against the dollar and 78p versus the euro, it was estimated.
    Thats about as meaningful as me saying Birmingham City will end the calendar year 2011, in 15th place in the Premiership.

    They will have predicted that based on a model using the maximum information available to them today but there are so many unpredictable events that could happen, in both the US and the UK, between now and then, that you can't possibly predict this with any form of accuracy.
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    Weak pound = Good for export industries = Good for Britain

    Strong Pound = Opposite = Opposite

    In short.
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      (Original post by Teaddict)
      Sterling will be the best-perfoming major currency next year, Barclays has forecast, as the UK gets its "house in order". l
      Not according to this, it won't:

      The Yen may end up being the strongest foreign currency as we go into 2011-2013 as it is closest to China, which will do well initially until the U.S. economy really collapses after 2012-13. Monthly chart trend lines into Feb. 2012 point toward 126.20, which seems unheard of but we are moving into unbelievable times.
      http://www.fortucast.com/prod_financialcharts.aspx
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      (Original post by yawn)
      Not according to this, it won't:
      :ditto:

      I always thought it would be the Yen :confused:
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      (Original post by Paxdax)
      Weak pound = Good for export industries = Good for Britain

      Strong Pound = Opposite = Opposite

      In short.
      Or one might say

      Strong pound = good for consumers who can buy things from abroad for less and who experience lower prices as a result of the lower cost of imported raw materials = good for Britain.

      In short; there are upsides and downsides...
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      But that's bad. Also, I will take this with a bit of salt as it's too hard to predict the future of the economy. So many things could happen between now and 2012 which could turn that up on it's head.
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      (Original post by Budgie)
      Or one might say

      Strong pound = good for consumers who can buy things from abroad for less and who experience lower prices as a result of the lower cost of imported raw materials = good for Britain.

      In short; there are upsides and downsides...
      But then surely that's better for the economy of the countries we are buying from, but if it's cheaper abroad and people are buying from abroad rather than the UK, then surely that's not very good for our own economy?
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      (Original post by Budgie)
      Or one might say

      Strong pound = good for consumers who can buy things from abroad for less and who experience lower prices as a result of the lower cost of imported raw materials = good for Britain.

      In short; there are upsides and downsides...
      That's the short-term good, yes. Long-term would create a current account deficit which would rake up debt and cause unemployment in Britain (due to inability to compete with a strong pound). This is not sustainable.
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      (Original post by yawn)
      Not according to this, it won't:
      My article says the Pound WILL be the strongest whilst yours say the Yen MAY be the strongest

      But that aside, Barclays predicts otherwise.
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        (Original post by Teaddict)
        My article says the Pound WILL be the strongest whilst yours say the Yen MAY be the strongest

        But that aside, Barclays predicts otherwise.
        Perhaps Barclay's have got crystal balls. I hope they're wrong, Teaddict...for the sake of Britain's recovery.
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        It will be interesting to see what effect this has on UK exports.

        It's pretty obvious that next year the Euro is going to have a low value especially if problems occur with Spain and Portugal and the rumours of Euro break up strengthen. If sterling does perform strongly then it is going to appreciate significantly against the Euro. After the US our main trading partners are all countries that use the Euro: Germany, France, Netherlands, Ireland, Belgium, Spain and Italy. Then you get China who artificially keep their own currency undervalued by the government intervening in the foreign exchange market. So it's going to become relatively more expensive for all of those Euro countries to buy British goods compared to buying from each other, so we're going to lose trade with our main partners, to Eurozone rivals. Besides this the European economies are in trouble anyway so it's not like they will have enough extra demand in their own currencies for people to buy British goods.

        This is not going to be helpful in us trying to stimulate our own economy, I very much doubt we will see anything 'export driven', we will need to rely on stimulating domestic demand rather than greater demand from overseas. I am sceptical that this is going to happen. There is going to be no fiscal support so the only policy tool is monetary policy and we are already at 0.5% interest rates....there is talk of another round of quantitative easing but the last round didn't have much effect because when the extra money is supplied to the banks they are using it to increase their reserve ratios rather than lending it so the money supply increase isn't getting passed on to consumers and firms. A strong pound is going to compound our problems, it won't take much to tip us back into recession in 2011 or 2012.
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        2011 should certainly be interesting economically.

        In regards to the strength of the YEN and GBP, i can certainly see the case for both. The UK currently has rising employment levels, and relatively strong inflation, as the bulk of the cuts will not be felt until the summer, this is likely to be the case until at least Q3 2011, making the case for a strong GBP during 2011. In regards to the YEN, that is more complicated, the reason for the recent 40 year highs is mainly because Japan has managed to maintain a trade surpluss throughout the recession and has emerged from recession with stronger growth than most other competitors, recently however the strong YEN has resulted in a rise in unemployment and a lower trade surpluss which would ordinarily lead one to assume a weaker YEN in 2011, however for the first time since January 2009, Japan has seen inflation, an indicater of strong economic growth which may be enougth to prevent unemployment from rising much more.

        In summary, the UK economy may slow in the second half of 2011, if it does the £ will weaken. If the Japanese economy slow early in 2011, the GBP will be the stronger, if Japans economy maintains strength, then the Yen has it.
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        Well an increase in the pound will push down already super high petrol prices so that's a plus.
       
       
       
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