“No early signs” of sterling collapse

Recent falls of the pound against the dollar and the euro are not early signs of a sterling collapse, according to Capital Economics.

In a note, the independent macroeconomic research consultancy says while it does not rule out further weakening of the currency against the dollar, the pound no longer needs to depreciate sharply.

John Higgins, senior market economist at Capital Economics, says he agrees with Mervyn King, the governor of the Bank of England, that “a weaker pound is good news for an economy trying to wean itself off consumption and boost its competitive position”.

Higgins says sterling could weaken to $1.55 dollar/pound by the end of the year, although he expects it to strengthen significantly against the euro.

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