financial news and information list: Sterling exchange rate in 2009 will be going

The Office for National Statistics announced on the 24th, British GDP in the third quarter from the previous 0.5 percent decline in the first quarter, which is in the past 16 years Britain's economy contracted for the first time. Affected by this, in 2008 24 London foreign exchange market against the U.S. dollar continued to drop pounds, 1 pound 1.5269 U.S. dollars for the August 2002 low. This is the October 24, 2008 in the British capital London shooting of a 50 U.S. dollars with a face value of the notes (before) and a note with a face value of 20 pounds

With the Bank of England - the Bank of England rate cut sharply in a row, the exchange rate of sterling against the euro by the end of October 2008 from 1 to the level of 1.287 dropped all the way to start. In recent days, a lot of foreign exchange in the United Kingdom, 1 pounds to the dollar only 0.98 euros. In other words, the real value of the pound has begun to below the euro.

Standard Chartered Bank chief economist Lee Lai even think of the next month, the British pound against the euro exchange rate will continue to decline 0.9 than 1.

Why is the substantial depreciation of sterling

Led to the rapid devaluation of the pound against the euro, the main reason why Britain is lower than the rate in the euro zone interest rates, sterling has lost its appeal to investors.

Investors generally believe that the UK economy in the euro zone than the level of a serious recession. This means that there is still adopted by the Bank of England to cut interest rates to stimulate the country's economic development possible. 3 months in a row after a sharp cut Britain's benchmark interest rate in October from 5% to 2% of the present. The euro zone's benchmark interest rate remained unchanged at 2.5 percent. The European Central Bank has hinted that early 2009 is unlikely to cut interest rates.

In addition to the interest rate gap between the economic recession, the unemployment rate continued to rise, house prices have been falling, as well as the rapid increase in government debt, and so on, so that investors have lost confidence in the pound.

According to the National Bureau of Statistics data, in the third quarter of 2008, the United Kingdom the previous quarter GDP fell by 0.6 percent. Standard Chartered Bank expects the UK GDP will be 5 consecutive quarters of negative growth in the fourth quarter of 2009, the United Kingdom is expected to be weak economic recovery.

Xi Dai Bank of England to make the real estate market suffered heavy losses. Market research firm Global Insight Experts predict that in 2008, 2009 British house prices will fall 18% and 15%. At the end of 2009, the British house prices in August 2007 from a peak of about 31% of the decline, until the second half of 2010 is expected to gradually warmer.

In addition, the United Kingdom, according to the National Bureau of Statistics data, as of the end of Nov 2008, the United Kingdom the total number of unemployed has risen to 1,860,000, the unemployment rate rising to 6% in 1999, its highest level since. Britain's National Economic and Social Research Institute predicted that in 2010 Britain's unemployment rate will rise to 7% in 2011 will rise to 7.5 percent.

At the same time, in 2009 the British Government will have to worry about debt. During the fiscal year (ended March 2009) 8 months ago, the British Government has accumulated deficit of up to 39,400,000,000 pounds over the same period last year as much as twice as high. Standard Chartered Bank forecast for the next fiscal year, the British government debt to GDP accounted for 65-70 percent.

However, the devaluation of the pound is also considered conducive to economic recovery in the United Kingdom. Bank of England has said publicly that the depreciation of sterling against the British economy back into balance is essential. It is said that devaluation of the pound is a "double-edged sword", although in the short term will crack down on domestic consumer confidence, raising the cost of the British travel abroad, but there is beneficial to Britain's exports and attract foreign tourists.

Sterling going

Sterling exchange rate against the euro dropped sharply in the final analysis the British economy into recession caused by the euro-zone economy is not increased.

Although the United States and Britain compared to the current level of economic recession in the euro zone is less deep, but the euro-zone economy may be in the first quarter of 2009 began to deteriorate. Eurostat published data show that in the third quarter of 2008 the euro-zone GDP growth rate was negative 0.2 percent. Standard Chartered Bank forecast that the euro-zone GDP growth in 2008 will be maintained at a low level of 0.9 percent, its growth rate in 2009 will be negative 1%.

With the deepening recession in the euro zone, the euro will be weak, the devaluation of the pound against the euro, the pace will slow down. From the British Government's point of view, the end of 2010 in the British economy was recovering strongly before, the best pound to maintain a weak state, but the euro-zone member countries of the continued devaluation of the pound would be opposed because their exports will be subject to substantial depreciation of the pound Impact.

HSBC predicts the pound against the euro, the average exchange rate from the third quarter of 2008 than a rapid decline to 1.27 in the fourth quarter than the 1.11 of 1, 2009 in the second quarter will continue to decline, although more than 1 to 1 .09, But the rate of decline has obviously slowed down. Morgan Stanley's forecast is more optimistic: in the second quarter of 2009, the British pound against the euro exchange rate could be picked up 1.23 to 1.

Devaluation of the pound against the euro, the exchange rate close to 1 to 1, so that whether or not Britain join the euro once again become the issue the focus of attention from all walks of life. British Secretary of Commerce Peter Mandelson said that the Government will join the euro zone as a long-term goal is to the right, but this is not the time.

To join the euro zone, Britain in Europe will no doubt be able to have a stronger voice. However, do not join the euro zone, which can maintain an independent monetary policy, especially now that it can be free to adjust monetary policy to deal with the economic crisis suffered by the British.

In the final analysis, going pound exchange rate, will ultimately depend on how the UK economic fundamentals.