BLBG: Euro May Weaken on ECB’s Reluctance to Buy Debt, Barclays Says
The euro may weaken against the U.K. pound in six months to a year because the recession in the euro region may be prolonged by the European Central Bank’s reluctance to buy government or corporate debt, according to Barclays Plc.
“We see little likelihood of ECB buying either private or government securities,” currency strategists at Barclays Capital including Paul Robinson in London wrote in a note. “In the short run, this is positive for the euro but raises the likelihood of a prolonged recession in the euro area.”
The euro will weaken to 83 pence in six months and to 80 pence in a year, Robinson said in a telephone interview. It fell to 90.28 pence by 2:25 p.m. in London, from 90.87 pence yesterday.
Gross domestic product in the euro region declined 1.6 percent in the fourth quarter from the previous three months, the most in at least 13 years, the European Union’s statistics office in Luxembourg said today, revising down a March 5 estimate of a 1.5 percent contraction.
