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Why sterling will "outperform" longer term
As UK Chancellor George Osborne says "Britain's economic plan is working”, Neil Staines, Head of Trading at ECU Group, explains market reaction was rather subdued and that the pound lost ground. But he doesn't think this dip will last and that in fact sterling will outperform long term. He is also positive on Britain’s economic outlook.
Mr Osborne said Britain was growing "faster than any other major economy". He announced the Office for Budget Responsibility (OBR) had more than doubled its growth forecast for this year from 0.6 percent to 1.4 percent. And instead of forecasting growth of 1.8 percent for 2014, they were now predicting 2.5 percent.
Neil says: “We have been positive on the UK for a long time now, some of those things we have been looking for are coming to fruition. The Autumn Statement was important for a number of reasons, particularly the raising of the OBR's estimate and the obvious cutting of the deficit targets.”
Markets reacted cautiously to the Autumn Statement, with the pound weakening from near a two-year high against the dollar. Speaking about this, Neil says: “Ironically we saw some selling of sterling on the back of what we see is positive news. But long term, that is largely a function of a market that is a little bit apathetic towards the end of the year and liquidity is very light."
He adds: "We still very strongly believe that Sterling will outperforms on a broad basis going forward."
01:23 minutes
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