Sterling Will Fall 12% on Financial Woe, BNP Paribas Says
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By Anchalee Worrachate
Jan. 7 (Bloomberg) -- The pound will fall 12 percent against the dollar this year as deteriorating public finances, concern the nation’s credit rating may be cut and political discord deter foreign investors, BNP Paribas SA expects.
Sterling will drop to $1.5730 in “coming weeks” and slide further to $1.40 by the end of the year, according to Ian Stannard, a currency strategist in London at BNP Paribas, France’s biggest lender.
“The pound will fall off the cliff,” Stannard said in an interview. “There are a number of negative factors that work against it. Some high-profile bond investors already said they are pulling out of the U.K. If foreign investors start to turn their back on the gilt market, that will be quite bad for sterling.”
Sterling fell 0.7 percent to $1.5912 today, from $1.6019 yesterday.
Moody’s Investors Service warned in December that Britain may “test the Aaa boundaries.”
The Bank of England will keep the benchmark interest rate at a record low 0.5 percent today, all 53 forecasts in a Bloomberg survey showed.
“We are unlikely to see any rate hikes in the U.K. this year, and perhaps well into next year,” Stannard said.