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2014 British economy and the pound prospect

Wednesday, 25 December 2013 02:38

2014 British economy will continue to improve it?

The end of 2013 the market are reviewed British economy back on track , while Britain's FTSE index is expected in 2014 recorded a 20% increase. With key indicators have pointed high , so I am concerned that the UK makes a mistake that may arise .

In fact, the key point is that the Bank of England does not seem to know how to deal with "real inflation" and interest rates. Once again we see 95% of the re-introduction of the British mortgage lender , it seems Britain estate boom will not soon end the chase , I personally do not agree with this culture. Unfortunately , this culture from generation to generation , most have children approaching retirement or already retired people ( may be lower than the current retirement age ) still encourage and promote the next generation to build their debt . The current level of interest rates remains at historic lows , the British will continue to be paid on top of the market over- inflated prices. Once interest rates start to rise periodically , then what will happen then ? Very simple, the outbreak of a new round of real estate and credit bubble collapse .
From a personal point of view, the British housing bubble is like watching a train crash as slowly approached . But there are too many people to rely on over-inflated prices to finance unsustainable debt levels .

UK inflation problem now is , it is eroding the overall standard of living of the British , and poses the most serious impact on the poor. This is why we see the politicians are discussing energy companies wanton suppression prices . This is a strategy bipartisan attempt to suppress energy prices.

Overall, the United Kingdom also have exciting side. The market is expected next year the UK economy will grow by 2.7% ( previously expected to grow by 2.2% ) , the growth rate will return to the level before the financial crisis in 2008 . UK unemployment continued to decline and the Bank of England to raise interest rates close to the trigger threshold level of 7%. This is the good news? If you think the Bank of England will cut interest rates , then it is good news. But I personally do not think so, the Bank of England is expected to become the first central bank to raise interest rates , the interest rate hike as early as 2015, the Federal Reserve .

Forward-looking policy guidelines of the Bank of England - the UK economy is good or bad ?

Carney and forward-looking guidance. After the selection of the Bank of England to break the traditional British central bank governor Carney served from the outside, I reported to the optimistic expectations, but in the speech Carney and want attention after inflation risks , I expect no more . I was convinced Carney will focus on potential problems inside the UK , and will not fall into the Fed -style " trap ," but Carney and Fed policy is almost the same , whether the cut is also facing the problem of scale asset purchases . Losing credibility faced , Carney question is what he will do and what the guidelines for the prospective position ? Carney fall into the "wait and see " trap. The overall market is expected to keep the benchmark interest rate to stimulate growth through at historic lows. But we see marginal growth from the UK once again ignited by the credit rates and consumer spending , business investment or not the Bank of England stimulus. As a result of the restructuring of the UK banks, but they are not lending to small businesses , this may be the best way to promote sustainable employment and economic growth.

So in the forward-looking guidance Carney term he will introduce what initiatives it? Carney is not much that can be utilized tool . With the unemployment rate fell to 7 percent fast , the consequent hike dispute will be heating up again . Other measures more of an asset purchase, but because the Federal Reserve will begin in January next year to cut the size of QE , the Bank of England will be more inclined to cut debt purchase size, rather than increasing the size of the debt purchase .

The main measures are owned by the Bank of England has a number of banks. Britain 's central bank helped bail out these banks , the effectiveness of the current time they need to . British central bank had forced the banking industry in a structured and responsible manner to small medium-sized loans. This is the Bank of England to stimulate sustained growth in the UK economy the way .

I am not here to talk about what will happen afterwards . In fact, although Carney did not waving a magic wand to repair the UK economy , but he still made ​​some tough decisions. In 2014 we will see the Bank of England to raise interest rates . Britain has a large aging population and inflation-linked pensions, cash and stock . As interest rates rise only a matter of time , then some of the UK housing market will suffer heavy losses, while the majority of British debt levels will not be sustainable. 2014 is a crucial year for the UK , for people living in the UK and is debt -ridden , the day and the next few years will not be easy .

2014 British Pound Outlook

Based on the UK will be the first country to raise interest rates perspective , I believe that GBP / USD will weaken the end , but it will be strong again in the first quarter of 2014 to the end of next year will rise to 1.73289 . Support at 1.5648 , the strong dollar is unlikely to drag on the exchange rate testing 1.53122 , so if the dollar initially fell , I will buy the pound fell sharply after the dollar .

Similarly, the euro / sterling , is expected by the end of the euro will remain strong and the euro / sterling hit resistance at 0.85270 , after which crosses the critical point decline in 0.82343 target level by the end of 2014, the exchange rate will fall to 0.79060 .

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