The recent boost in the Sterling Exchange rates might only be shortlived. A weak Pound Sterling is the only way for the UK to regain economic power, says Neil Mellor, Forex expert at the Bank of New York Mellon, in the FTD from 10/26/10.
After yesterdays announcement by Standard&Poors to lift UK’s rating from “AAA negative” to “AAA stable”, and the Office of National Statistic’s announcement of a 3rd quarter GDP growth estimation of 0.8%, the Pound won significantly against the major currencies for the first time in months.
Photograph: Bloomberg/Bloomberg via Getty Images
This looks likely to delay quantitative easing (QE) by the Bank of England, says Jonathan Loynes of Capital Economics in the FTD. Therefore, the pound might be in for further trouble, as many economists see the need for further QE by the Bank of England. This in return would devaluate investements in the UK, so would this be the right strategy for long-term economic recovery?
Yes, says Neil Mellor, as a weak Pound Sterling would support the British economy which is taking beating after beating right now. I personally have some doubts in that concern, because a weak national currency primarily supports the export of goods – but which goods does the UK have to export on a large and economically significant basis? Its biggest and most important industry still is the financial services industry, which had no small part in the 2007/2008 financial crisis and which is right now putting the pound under pressure by speculating on whether or not there will be more QE…
What do you think?