GBP NZD Long Term

[ruethewhirl]

Yeah, as someone with 5 years savings in GBP, I'm watching the NZD/GBP cross closely.

Hard to imagine anything that is going to drive up sterling in the short term, but the market is full of surprises. Labour's out next year, so that's got to be a good start.

[ruethewhirl]

From "Top Ten investment tips for 2010 from Goldman Sachs"...

"Long Sterling (against the Kiwi dollar of all things): Actually, that
is a great idea – the pound and the kiwi are massively misaligned by
historical measures. GS says New Zealand’s central bank will raise rates
more slowly than markets think. The Bank of England will tighten more,
by 300 basis points by late 2011."

http://tinyurl.com/ygc3y5m

[Dusty]

From "Top Ten investment tips for 2010 from Goldman Sachs"...

"Long Sterling (against the Kiwi dollar of all things): Actually, that
is a great idea – the pound and the kiwi are massively misaligned by
historical measures. GS says New Zealand’s central bank will raise rates
more slowly than markets think. The Bank of England will tighten more,
by 300 basis points by late 2011."

http://tinyurl.com/ygc3y5m

Although I agree the Kiwi has massively appreciated against the pound as have the other commodity currencies so pound could be due a bouce. I disagree (yes thats right disagree with Goldman Sachs) with some of the reasoning behind this.

Public debt in Britain will reach 90pc of GDP by 2011 and rates agencies including Fitch have given indications that they will cut British debt froms it higly valued AAA rating if no clear method is given how the public debt will be tackled, and so far neither party has really come up with anything substantive.
In this election year I also find it highly unlikely that both monetary and fiscal policy will be strongly tightend at the same time and the direction has been leaning towards cutting spending and raising taxes to tackle debt. If British debt becomes garbage so does the pound, inflation is also not that much of a concern so rates do not have to be hiked in that respect with alot of market commentary (Ambose evans Pritchard himself) focusing on deflation being more likely.

And from what I read it seemed Bollard indicated he was going to raise interest rates sooner rather than later, possibly even march this year although there isn't much cause to worry about inflation in NZ at this point either really.

http://www.bloomberg.com/apps/news?p...d=aDRT5YUKjTu4