Why Everyone Hates The Pound

thenews 2013.01.29 16:28

The British pound has fallen out of favor among currency investors so far in 2013.

Since hitting a high of 1.6379 against the U.S. dollar on January 1, the pound sterling has tumbled nearly 4 percent to today's levels around 1.5735

Société Générale Head of FX Research Kit Juckes says that at this point, "Sentiment towards sterling is getting to be about as negative as it can usefully be."

Juckes says three bearish arguments for holding pounds are all hitting the market at once:

U.K. GDP, which was expected to fall 0.1 percent last week, actually fell 0.3 percent, which has everyone talking about a "triple-dip" recession in Great Britain. Juckes says this is a big reminder for investors of how the British economy continues to underperform as a global recovery begins to form.
British Prime Minister David Cameron's recent speech proposing a referendum on the country's membership in the EU, Juckes says, "will do nothing to attract the capital inflows needed to offset a huge current account deficit." Big current account deficits usually mean weak currencies.