BLBG: Pound to Fall as Central Bank Resumes Bond Purchases, High Frequency Says
The pound may weaken because the Bank of England’s Monetary Policy Committee is poised to expand asset purchases and Britain’s “woe-begone economy” faces economic challenges, High Frequency Economics said.
“The MPC is getting ready to re-boot its Asset Purchase Facility as soon as the next MPC meeting,” Carl Weinberg, chief economist in Valhalla, New York, wrote in a note today. “If it does, the pound will tumble on all cross rates.”
Reports this week may show a U.K. retail sales index dropped in September and mortgage approvals declined, according to the median estimates of economists in separate surveys. Hometrack Ltd. said today U.K. home values dropped by the most in 18 months in September.
The U.K. has “the grimmest short-term economic outlook amongst the universe of economies we patrol,” Weinberg wrote. “An irrevocable monetary and credit crunch, fiscal austerity, trade decay. Surely internationally mobile investors should be able to find a more attractive place to invest!”
The pound was little changed at $1.5830 as of 4:13 p.m. in London. It strengthened 0.2 percent to 85.08 pence per euro.
To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net
To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net
