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Negativity to sterling 'could ease'

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An expert has suggested that any negativity towards sterling could be set to improve in the near future.

Director of forex advisory services at foreign currency exchange brokers HiFX Chris Towner argued that this is the case - despite the recent downgrading of the country's credit rating by Moody's.

He had previously warned that sterling is surrounded by negative sentiment at the present time, so this would mean that the medium to long term outlook might be set to improve.

Mr Towner acknowledged that a currency comparison would have indicated that sterling was weakened against the US dollar and the euro last week (February 20th).

However, while growth in the UK throughout 2012 was thought to be zero at the time, the National Institute Economic Review predicted that this will improve in 2013.

Indeed, the Second Estimate of GDP, Q4 2012 report from the Office for National Statistics has since revealed that growth was not so stagnant last year after all.

This paper saw the figure for the 12-month period revised upwards from zero to 0.2 per cent.

Mr Towner argued that the Moody's rating downgrade of the UK could have positive implications.

The expert explained that the nation has been placed on a stable outlook, meaning that another rating cut is not anticipated over the next 12-18 months - and this was not the case for the US or France when those countries were downgraded.

He said: "The predators in the market will now be looking at sterling to see whether there is any more opportunity for weakness; however, given that it is already significantly weaker, there may now be some other more opportunistic trades in the market leaving sterling to lick its wounds.

"George Osborne on the other hand has another theatre of predators to face," Mr Towner remarked.

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