At more than 12 percent of GDP, the U.K. budget shortfall is on a par with Greece...

Discussion in 'Wall St. News' started by ASusilovic, Mar 9, 2010.

  1. March 9 (Bloomberg) -- The pound’s drop last week to a 10- month low may help the U.K. economy grow faster than the region sharing the euro, which is hobbled by budget deficits and aging populations, according to Goldman Sachs Group Inc.

    Concerns U.K. elections this year may give the nation its first minority government since 1974 helped drive down sterling by 7 percent since Dec. 31, the worst performer this year among the 16 most-traded currencies. The euro is still trading about 10 percent above its fair value against the dollar, said Erik F. Nielsen, Goldman Sachs chief European economist.

    “People are very bearish on the U.K., probably more than they should be,” Nielsen said in an interview in Sydney yesterday. “The euro is clearly in its biggest crisis since it started, so it’s kind of strange that it’s overvalued.”

    The pound dropped to $1.4784 on March 1, the weakest since May 1, 2009, and bought $1.4970 as of 9:10 a.m. in London. It reached a three-month low of 91.50 pence versus the euro on March 1 and traded at 90.76 pence today.

    Sterling posted its third weekly decline against the euro and U.S. currency in the five days ended March 5 as opinion polls stoked concern the U.K. may elect a minority government, hampering efforts to accelerate the economy’s recovery and control a record budget deficit. National elections must be held by June.

    At more than 12 percent of gross domestic product, the U.K. budget shortfall is on a par with that of Greece.

    So strange that the EUR is "overvalued" against GBP. very starnge indeed, Goldman Sachs. Ay, ay, ay... :D :D :D
  2. 4EXJOE


    Brits can print their own currency; Greeks cannot.
  3. Short-term buy signal! :eek: :D :eek: :D
  4. Question: how does one determine if a currency is "overvalued"?
  5. Greece had to demonstrate its deficit was <3% to join the EU. Since, just "borrow and spend yourself into oblivion"... greedy Socialist Bastards!!
  6. We don't. Bernake and Soros do. Let's not forget Jim Rogers. Remember this. Every time the euro gets near 1.50 it gets knocked down. Same with your loonie. Remember when it was around 1.12 to USD. That didn't last long.
  7. zdreg


    10%? compare the real cost of living in london vs. new york. london is probably 30 to 50% more expensive.