Accumulation of bad news from the UK justifies a weak Sterling – Commerzbank
|GBP/USD has dropped below 1.2250. Economists at Commerzbank note that the dire overall situation the UK is currently in justifies a weak Sterling.
Why the state of Great Britain is GBP negative
“Whereas the most urgent real economic factors putting pressure on the economy seem transitional on the Continent (the threat of a gas crisis and the resulting high energy prices) the urgent British woes seem to be more permanent. It is therefore not implausible to assume a long-term growth disadvantage for the British economy as compared with Europe.”
“As long-term growth is relevant for real exchange rates the prospect of that plays a role for today’s exchange rates. And that is why this accumulation of bad news from the island constitutes a sufficient justification for Sterling to be weak.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.