Once Unthinkable, Parity for Sterling Is on the Horizon
- UK assets exposed to poor growth, big foreign capital needs
- Odds sterling is lower than dollar by year-end rapidly falling
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The prospect of the pound hitting parity versus the dollar is becoming ever less outlandish. The looming threat of a recession, acute dependence on foreign capital, soaring debt costs, and the rising likelihood the Bank of England’s independence will be circumscribed are bad news for UK assets, and leave bonds and the currency in an increasingly precarious position.
UK-bashing has become something of a national pastime, but it is hard to come to an optimistic outlook by taking a dispassionate look at the data. There is no point in mincing words: the situation looks dire.