Pound may underperform G10 currencies in 2011 -- JPMorgan
The pound may be the worst-performing currency of the Group of 10 nations through the end of next year as the UK government cuts spending and the central bank expands asset purchases, JPMorgan said.
“Aggressive fiscal tightening, along with household and bank deleveraging evident in a softening housing market and consumer demand, likely will compel the Bank of England to implement further quantitative easing,” JPMorgan strategists led by Gabriel de Kock in New York, wrote in an investor note dated yesterday.
“With Bank of England policy relegating the pound to funding-currency status,” sterling may depreciate to 88 pence per euro by June and drop to $1.47 by the end of 2011, the analysts wrote.
The pound rose 0.2pc to $1.5690 and strengthened 0.6pc to 85.03 pence.