3 Dec 2013
Flash: Sterling bid, but for how long? – RBS
FXstreet.com (London) - RBS strategists said the UK's fiscal and current account deficits will remain bloated and among the largest in the developed world.
Key Quote:
“With many of the most politically-sensitive spending cuts having been kicked into the long grass beyond the May 2015 general election, rectifying the UK fiscal position still has some way to go. On the RBS forecast the UK current account deficit narrows only marginally in 2014: to 3.4% of GDP from 3.8% in 2013”.
“These are the largest external deficits for two decades and, alarmingly, have come despite a prolonged period of sluggish domestic demand. At some point the currency markets will take heed, but for much of 2014 we expect stronger near-term activity data to support sterling”.
Key Quote:
“With many of the most politically-sensitive spending cuts having been kicked into the long grass beyond the May 2015 general election, rectifying the UK fiscal position still has some way to go. On the RBS forecast the UK current account deficit narrows only marginally in 2014: to 3.4% of GDP from 3.8% in 2013”.
“These are the largest external deficits for two decades and, alarmingly, have come despite a prolonged period of sluggish domestic demand. At some point the currency markets will take heed, but for much of 2014 we expect stronger near-term activity data to support sterling”.