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“Zen International”–International Forex-[EuroSterling Heading For Parity]
Added: (Thu Oct 08 2009)
“Zen International”: A slew of poor economic news sends sterling into a renewed downtrend.
“Zen International” sources say that firm is convinced that sterling will achieve parity with the euro before the end of 2009 after worse than expect economic data dampened hopes that the UK is emerging from its damaging recession.
Recent figures showing worse-than-expected manufacturing output in Europe’s second largest economy appear to point to contraction rather than growth and “Zen International” believes this is indicative of the likelihood that Britain will be among the last of the developed economies to emerge from the global slowdown.
Sterling has fallen precipitously since its highs against the US dollar in November 2007 when it traded at $2.11. The onset of the financial crisis and subsequent bailouts of the nation’s banking sector have combined to drive sterling down to as low as $1.39 in January 2009.
Although hopes have risen that the unprecedented fiscal and monetary easing will lift the economy out of recession, “Zen International” believes that the stubbornness of the manufacturing sector and the consumer’s reluctance to partake in the economic recovery are likely to see the pound sink to parity against the euro.
“Zen International” suggests that the likelihood is that the bank of England will extend its quantitative easing policy in the coming months as bond markets come under pressure – a phenomenon that the firm sees as inevitable given the possibility that the US Federal Reserve will end its own QE program sooner rather than later.
Such an extension would almost certainly see sterling return to test the lows against other major currencies.