Sterling has weakened considerably to kick off 2013 with several themes at play here. One is the fundamental fact that the British economy stands to enter a triple dip recession having ended 2012 with no growth. Secondly, the EU is looking much more attractive to investors. While 2012 will be remembered as the year investor fled euros and parked their money in sterling and swiss francs, 2013 sees these same investors putting their money back in euros. Lastly, I have noticed that sterling is correlating to the USD much differently than it had in 2012. While a strong GBP saw a strong USD (and visa versa), that correlation is no longer. Now sterling is weak across the board with currencies of the stronger economies (CAD, AUD, NZD) leading the charge.
- UK PM to deliver long-awaited EU speech this week (Reuters)
- Saxo Bank Q1 FX Outlook: Sterling to continue as safe haven to Eurozone (Tics & Pips)
- UK housing haven wavering (Financial Times)
- Yen and Sterling set to weaken (Financial Times)
- 2013 Forex Outlook: More Of The Same For The British Pound (Seeking Alpha)
- Bundesbank to pull gold from New York and Paris in watershed moment (The Telegraph)