Forex Flash: UK economy could benefit from fall in GBP – ANZ

FXstreet.com (Barcelona) - The UK budget at best is neutral for the GBP, however the focus on monetary activism implies further, near-term easing in monetary policy. Indeed, “Sub-trend economic activity and an absence of wage inflation (real wages are actually falling), suggest that any inflation feedback from the exchange rate will prove temporary.” Writes the ANZ Research Team. With inflation expectations broadly stable, sterling's weakness should not be an obstacle to further easing.

The pound has benefitted from the crisis in Europe and a shake out of long USD positions. “This may run further in the near-term, but it does not alter the argument that the economy could benefit from a real depreciation in the exchange rate.” the team adds.