Speaker 1: The pound is a graveyard for like G ten traders,
Speaker 1: the Pound, people only ever lose money on, even though
Speaker 1: it seems obvious.
Speaker 2: So just why is the pound so unpredictable? It was
Speaker 2: a year ago this week that it hit a record
Speaker 2: low against the dollar. Since then it's been one of
Speaker 2: the best performing currencies in the G ten, but now
Speaker 2: analyssa calling for further slides as the outlook for the
Speaker 2: UK darkens. I'm David Merritt. Welcome to In the City,
Speaker 2: Bloombok's podcast connecting you to the conversations at the heart
Speaker 2: of the city of London. This week we dig into
Speaker 2: the outlook for the pound with me in the London studio.
Speaker 2: We have Mark Hardmore, senior macro strategists on our Markets
Speaker 2: Live team and co hosts of our Markets Today program
Speaker 2: on Blouembok Television, and also Sofia Hauta Ecosta from our
Speaker 2: brilliant Markets Today blog.
Speaker 1: I'm already going to expect us to provide some glimmer
Speaker 1: of like light or shed light and how to trade
Speaker 1: the pound, because it's completely impossible. The pound only ever
Speaker 1: does what you shouldn't expect it to do.
Speaker 2: It's the currency you shouldn't trade, or it just doesn't
Speaker 2: behave how you want it to.
Speaker 1: But I say this classic example was that, like you know,
Speaker 1: when cable was above two ten back and seven and eight,
Speaker 1: it was just everyone knew you need to be short.
Speaker 1: It was a wrong price. The fundamentals were so negative,
Speaker 1: and yet it was really really hard to make money
Speaker 1: just because everyone kept on trying to sell it. You
Speaker 1: get this big dip down of fifteen big figures going
Speaker 1: blow to the figure, and then suddenly it'd squeeze higher
Speaker 1: and stop every night, and it's just it's impossible to
Speaker 1: make money.
Speaker 3: I mean, this is what makes the currency a very
Speaker 3: fun currency to cover. You know, I just moved here
Speaker 3: a few months ago, Dave. When I moved here, the
Speaker 3: pound was strengthening, and coming from abroad, everyone will say,
Speaker 3: you know, the UK economies and shambles, you know, there
Speaker 3: was so much doom and gloom, and yet it had
Speaker 3: a strengthening currency. And one of my colleagues on the
Speaker 3: blog said, you know, the pound is strengthening for all
Speaker 3: the wrong reasons. It's the high interest rate environment because
Speaker 3: the BOE has to fight inflation and keep raising interest
Speaker 3: rates for longer. And now Mark is it kind of
Speaker 3: weakening for all the right reasons. I mean, how would
Speaker 3: you kind of frame it now?
Speaker 1: So I've been someone who's been on the wrong side
Speaker 1: of this paneve. I've been burished the pound all this
Speaker 1: year and they've only started weakening recently, and it started
Speaker 1: as weakening as the fundamentals have improved. So up until May,
Speaker 1: we expected the UK economy to contract this year. Since May,
Speaker 1: we now expect a small expansion. The current account deficit,
Speaker 1: which was massive, I think it was more than five
Speaker 1: percent of GDP about a year ago, it's now, I'm
Speaker 1: not sure exactly, less than three percent of GDP. It's
Speaker 1: kurry count deficts has been improving rapidly, and now finally
Speaker 1: we're getting inflation coming down in the UK with the
Speaker 1: outlier because of staying high. So it's it's still got
Speaker 1: deeply negative real yields, but the real fields are going
Speaker 1: the right directions. Almost all the fundaments are improving, and
Speaker 1: now the UK is weakening. I do have a theory,
Speaker 1: tell Us tell us, But I said, I really that
Speaker 1: I've been getting sterling wrong, so I've got to disclaim it.
Speaker 1: I think that really everything in markets the moment is
Speaker 1: all about the consumer and you know, the one thing
Speaker 1: that's been really really getting worse. So you've got the
Speaker 1: economy of roles been getting betternacounts getting better, real rot
Speaker 1: it's getting bet all big macro factors getting better. But
Speaker 1: what we saw is last week and this reiterated, we
Speaker 1: saw the lowest service as PMI in the UK. The
Speaker 1: flash estimate on Friday was the lowest since January twenty
Speaker 1: twenty one. And we also saw another deeply negative retail
Speaker 1: sales print year in year, and it's been negative for
Speaker 1: the past like a couple of years. And what you're
Speaker 1: finally seeing is the people are going okay. The UK
Speaker 1: consumer is finally going off a cliff and I think
Speaker 1: a similar time into the US and that will be
Speaker 1: the fact where suddenly the higher rates aren't helpful because
Speaker 1: they're squeezing the consumer at vulnerable point and that's where
Speaker 1: you start trading the stagflation dynamic. So I think what's
Speaker 1: happening in Sterling now is that up for the past year,
Speaker 1: it's trading in the rates support and now it actually
Speaker 1: might start trading the stagflation dynamic as the consumer suffers.
Speaker 2: And that's another way of saying a recession, right, Yes,
Speaker 2: I think.
Speaker 1: A very very tough recession. Actually a very tough recession. Yeah,
Speaker 1: and because remember, you know, the UK has been forced
Speaker 1: to raise rates more than people anticipated, and it can
Speaker 1: cope the higher UK rates. It's kind of much more
Speaker 1: leveraged economy, and as many people have written about this year,
Speaker 1: it's housing market is much moreulnerable to the rate rises
Speaker 1: because everyone talks about US as long term fixed rates.
Speaker 1: And so even though mortgage rates thirty year mortgage rates
Speaker 1: in the US have gone up officially have gone up
Speaker 1: above seven percent, in practical terms, there's still like below
Speaker 1: four percent. So like, really the US housing markets are
Speaker 1: not being squeezed at all be higher rates, but UK
Speaker 1: really is okay.
Speaker 3: So I like to disagree with Mark and I Marke
Speaker 3: and I famously always disagree, but also just to kind
Speaker 3: of like throw a little bit of optimism here. There
Speaker 3: have been calls for a UK recession for months. I mean,
Speaker 3: we might be in one now. That's what some economists
Speaker 3: are saying that you know, when a recession does happen,
Speaker 3: you only know it until months later there are cracks
Speaker 3: starting to show, but it has been so much more
Speaker 3: resilient and one thing we're seeing, we're hearing from retailers.
Speaker 3: So this is kind of on the ground color that
Speaker 3: we're getting from the likes of Next and those m
Speaker 3: ands as well and older those companies that have been
Speaker 3: doing really well. Is that actually because wages are growing
Speaker 3: faster than inflation even though it you know, there is
Speaker 3: a real pay increase, and the consumer does feel better,
Speaker 3: and we might actually get a stronger u consumer than
Speaker 3: the doom and gloom that people expect. And you know,
Speaker 3: if the UK does have a recession, it might be
Speaker 3: a shallow one and I think that's something if you
Speaker 3: are thinking of where the pound will go. And as
Speaker 3: Mark said earlier, you know, if you have in the
Speaker 3: entire kind of trading community and all those hedge funds
Speaker 3: betting one way, the risk is that you'll be caught
Speaker 3: out when the pound doesn't go your way.
Speaker 2: Yeah. So last week the Bank of England stopped raising
Speaker 2: interest rates the first time in nearly two years. The
Speaker 2: most aggressive tightening cycle for decades came to an end.
Speaker 2: And I suppose it sounds like you're reading that sphere
Speaker 2: is a kind of a good sign because they saw
Speaker 2: the inflation print, they finally conquered inflation. Then the consumer
Speaker 2: can feel a bit better, or Mark, you seem to
Speaker 2: be saying that's because they thought recession is coming and
Speaker 2: we've got to stop now when we possibly overshot.
Speaker 3: I think we can both be right, you know, I
Speaker 3: think I don't think it's a job done for the BOE.
Speaker 3: I think that's more of a US FED story. There is.
Speaker 3: It's still one of the highest inflation rates in the
Speaker 3: developed worlds here in the UK, and Andrew Bailey, Governor
Speaker 3: Andrew Bailey and his team are kind of warning of
Speaker 3: weakening demand. And I do think Mark is right, as
Speaker 3: much as it pains me to say that there are
Speaker 3: cracks in the consumer's story. But I just don't think
Speaker 3: it will be as bad as people fear.
Speaker 1: But you say not as bad as pill fear. But
Speaker 1: and I understand that, like most of the last year,
Speaker 1: people were really really gloomy on the UK. I remember,
Speaker 1: you know, us covering on the show about like the
Speaker 1: peak pessimism was around December last year. It's been improving
Speaker 1: all year. We're now not expecting the economy to contract
Speaker 1: this year. We've got a little bit more negative about
Speaker 1: extra but we'll still expect your expansion next year. So
Speaker 1: the consensus out there is actually the UK to muddle through.
Speaker 1: So I would say that the consensus is not gloomy anymore.
Speaker 1: I agree it was very incorrectly very gloomy. Does that
Speaker 1: mean because Pip got it wrong once that you should
Speaker 1: now fear that downside? Maybe? I mean, we have the
Speaker 1: same dynamic in many other countries in the world, and
Speaker 1: I would say that, you know, the the UK story,
Speaker 1: I do think will be still be very very negative
Speaker 1: as the next rak.
Speaker 3: So what does that mean for the pound?
Speaker 1: Right?
Speaker 2: So we've got the I mean, we've got voices here
Speaker 2: in the Bloomberg story talking about some pretty negative forecasts. Right,
Speaker 2: We've got RBC and HSBC racing from all weakness. Bank
Speaker 2: of America BNP forecasting a sharper slide on the cars.
Speaker 2: We've got forecasts for one seventeen by year in one
Speaker 2: eleven by the second half of next year, according to
Speaker 2: somebody from RBC. I mean's that's a I mean one
Speaker 2: eleven for the pound. I mean you talked about the
Speaker 2: heady days of more than two dollars. I mean, I
Speaker 2: remember those days, right when the pound was above two dollars,
Speaker 2: people were talking about parity. This time last year that
Speaker 2: seems to have receded, but one eleven is in the
Speaker 2: ballpark of parody, Right, we really heard that.
Speaker 1: Well, one I'll say is I think a large change
Speaker 1: in those forecasts is about dollar strength. Right. So we
Speaker 1: entered this year with everyone being super bearish the dollar,
Speaker 1: and there people have kind of given up on that trade.
Speaker 1: And you know, one of the things that personally I'm
Speaker 1: becoming I do believe that the pound can weaken, but
Speaker 1: whether you know whether the dollar actually will be as
Speaker 1: strong when things might be problematic. So I think the
Speaker 1: pat on the Bloomberg Pound Index, for example, I think
Speaker 1: it can continue to weaken. And I do wonder whether
Speaker 1: the eure A sterling styles a chunk of top side.
Speaker 3: Yeah, I think I think That's the other kind of
Speaker 3: important thing to say about this. We are talking about
Speaker 3: pound weakness against the dollar, but maybe some of our
Speaker 3: listeners care more about what the pound does against the euro. Right,
Speaker 3: And the European Central Bank was one of the what
Speaker 3: was one of the only three between the FED, the
Speaker 3: BUE and the ECB that actually raised interest rates in
Speaker 3: this cycle. So what mark, what is the euro pound
Speaker 3: trajectory from here?
Speaker 1: I mean, I'm not super bullish the euro either, but
Speaker 1: I just I think it's a way better way to
Speaker 1: look at the sterling story because I think the dollar
Speaker 1: moves have just been so much more dramatic this year
Speaker 1: than if you start looking at a cable view of
Speaker 1: the sterling dollar exchange rate. You know, it's very eas
Speaker 1: to get conflate whether you've got a dollar view or
Speaker 1: a sterling view.
Speaker 2: I'm the four casts economically view there are not great. Again,
Speaker 2: I'm mean to your point about like these markets are
Speaker 2: interpreting the data in sort of slightly wacky ways. I mean,
Speaker 2: the latest numbers in from Germany, from France have been
Speaker 2: pretty grim on the economic growth front. So do you
Speaker 2: think the UK is actually going to fare a little
Speaker 2: better next year?
Speaker 1: So this is actually really interesting. So European economy is
Speaker 1: a basket case not doing well, particularly Germany and stuff. However,
Speaker 1: going back to the thing is it depends whether you
Speaker 1: think the consumer is key to the story or not,
Speaker 1: because what's happened is the European economy the consumer is
Speaker 1: slightly more insulated during a recession if there's a global recession.
Speaker 1: Not only do they have better savings rates around Europe
Speaker 1: and a less leveraged housing market generally in most countries
Speaker 1: in Europe, but they also have better social security, social
Speaker 1: support system during it a slowdown. So if you think
Speaker 1: there's generally going to be a growth slowdown, UK consumer
Speaker 1: is one of the most exposed to slower growth and
Speaker 1: higher instruates, more exposed in the US, as we said,
Speaker 1: because there's long term mortgages, and more exposed than Europe
Speaker 1: because they don't have those high savings rates and as
Speaker 1: high social security. So if you're a negative on global
Speaker 1: growth and you think the consumer is key, you should
Speaker 1: be very negative pound. If you're more rosy on the world,
Speaker 1: then Pound will continue to confound the bears.
Speaker 3: The post Brexit story for me is really interesting because
Speaker 3: I mean the last time I lived here was just
Speaker 3: after the Brexit votes, so it's kind of like just
Speaker 3: coming back and seeing, you know, the UK trying to
Speaker 3: say we actually grew faster than Germany during COVID and
Speaker 3: kind of this competitive kind of comparing economic growth models.
Speaker 3: But I mean it's a very different story. I think
Speaker 3: the euro Area is complicated given you know, Germany is
Speaker 3: a very different place to say Spain. It seems to
Speaker 3: be the kind of Northern Europe Southern Europe divide is
Speaker 3: going the other way, right, you know, Southern Europe is
Speaker 3: outdoing Northern Europe for growth for the first time in
Speaker 3: a long time. But how does the UK kind of
Speaker 3: factor in amid all that? And I mean, I just
Speaker 3: think people tend to be negative on the UK.
Speaker 2: Is that a Brexit fallout thing? Like we're sort of
Speaker 2: assuming this economy was going to get smashed by Brexit
Speaker 2: and it's yes, we've seen there's impact, of course there is,
Speaker 2: but it's not been the total disaster that a lot
Speaker 2: of people predicted, and its economy keeps on sort of
Speaker 2: surprising on the upside, doesn't it.
Speaker 3: I think it's just difficult to understand what the post
Speaker 3: Brexit story is from here. And I think, you know,
Speaker 3: just from an economic forecast model, where is growth going
Speaker 3: to come from in the coming decades? How do you
Speaker 3: kind of look at the currency story there? I think.
Speaker 3: I mean, when I moved here, I thought, Okay, I'm
Speaker 3: moving to a country that's in crisis, but it really
Speaker 3: it really isn't. There's a lot of difficulties here, of course,
Speaker 3: But you know, I think that on the ground, if
Speaker 3: you go to the high street day of and if
Speaker 3: you go to restaurants and I know London is its
Speaker 3: own microcosm, but the consumer is more resilient to those
Speaker 3: negative news. Maybe it's just used to negativity. It's you know,
Speaker 3: the UK consumer has gone through bouts of crises, and
Speaker 3: I think last year was such I mean, it was
Speaker 3: so volatile here in the UK, the kind of submerging
Speaker 3: market monoker that people used that you know, maybe maybe
Speaker 3: they can just kind of muddel along this time and
Speaker 3: you know, you still move here, right, even they still
Speaker 3: live here.
Speaker 2: That's exactly right. Country and crisis, but people still wanting
Speaker 2: to come and live and work here, and the economy
Speaker 2: is sort of muddling, muddeling through. I mean, you know,
Speaker 2: it's it's a sense of crisis and lots of places
Speaker 2: in the world, right.
Speaker 1: Yeah, I think you're right. I mean, look, UK and
Speaker 1: London in particular is always going to have an appeal
Speaker 1: for international investors, international money. People want to live here
Speaker 1: and it's going to retain that, right, London is one
Speaker 1: of the world's capitals, and so I think that gets
Speaker 1: a there's a there's a bit for UK housing, for
Speaker 1: UK lifestyle at a certain level. Now it's where is
Speaker 1: that level? Where is it ever? Price? But I think
Speaker 1: it does probably protect the UK from the real doom
Speaker 1: mongery prognostications. And you know, you're talking about what is
Speaker 1: the post Brexit narrative, And I think one of the
Speaker 1: things that's hard is that it's clearly not been a
Speaker 1: wonderful story, but it's also been nowhere near the bad
Speaker 1: news story. We've been somewhere in the middle. And also
Speaker 1: that's been really that that middle, middle to slightly negative
Speaker 1: world is in the context we did have a pandemic,
Speaker 1: So like, you know, how much is the pandemic how Brexit.
Speaker 1: So it's it's very hard to judge fairly and I
Speaker 1: don't think the verdict is out on how on how
Speaker 1: brexits worked out. But I will say that one problem
Speaker 1: which might still you know, foster may fester is a
Speaker 1: better whereever the years ahead is the fact that you know,
Speaker 1: the US communication, at least under a Biden presidency, the
Speaker 1: UK shouldn't even bother to seek a grand trade deal.
Speaker 1: Is a bit of a blow to that kind of
Speaker 1: whole UK taking control of its trade and kind of
Speaker 1: really orienting itself in a much more dynamic way. And
Speaker 1: I think you know, it did that a little bit
Speaker 1: around the pandemic and some of its solutions. But I
Speaker 1: think otherwise that that could be a bit of a
Speaker 1: headwind going forward, that it's having to kind of little
Speaker 1: bit part trade deals around the place is going to
Speaker 1: be problematic for its kind of.
Speaker 2: Out But the trend on the European front is definitely
Speaker 2: towards closer hich. I mean, even you know, Richi's sonat
Speaker 2: could manage to take a bit of the heat out
Speaker 2: of the debate. And then we've we've seen just the
Speaker 2: last week's Kissed Arma going to Paris talking about needing
Speaker 2: to renegotiate the deal. So the politics of this is
Speaker 2: that whoever wins next year, we are going to find
Speaker 2: maybe one a bit faster than the other in terms
Speaker 2: of the speed of normalizing relations. But we're on a
Speaker 2: trajectory to a sort of better working relationship with the EU,
Speaker 2: which is only gonna be good for the UK economy.
Speaker 1: Yes, I think so. Actually, insted up, we had this
Speaker 1: open ended question reasoning because UK stock has been discounted
Speaker 1: for a long period of time, and you know, we
Speaker 1: keep people on the show all the time. Okay, UK
Speaker 1: stocks are cheap, and I agree they are cheap, and
Speaker 1: almost any metric. They seem like a great story and
Speaker 1: you're like, what's going to change? They've been cheap for
Speaker 1: a long period of time. What's the catalyst for a
Speaker 1: get upside? So we asked this as an open ended
Speaker 1: question our recent M Live Pulse survey, what will be
Speaker 1: the catalyst? And I would say a plurality of the
Speaker 1: answers was rejoined the EU, which is clearly a tongue
Speaker 1: in cheak kind of answer, but that's a feel think.
Speaker 1: But I do think close relationships with Europe will kind
Speaker 1: of help things. Actually, one of the things in that
Speaker 1: survey I thought was really interesting because it's already been debunked.
Speaker 1: We ran the survey and only two week weeks ago,
Speaker 1: and we said UK tenor yields used to be below
Speaker 1: US tenure yields for years, and then as of trust anomics,
Speaker 1: they blew above them, and then they came back down
Speaker 1: after you know, Liz Trust went and we got new
Speaker 1: kind of government in place and it kind of seemed
Speaker 1: to calm down. But for the past six months, up
Speaker 1: until a couple of weeks ago, UK tenor yields were
Speaker 1: comfortably above US yields. So we asked people when will
Speaker 1: UK tenure yields fall below US tenor yields, and we said,
Speaker 1: you know, will it happened before the end of this year,
Speaker 1: will it happened first half next year? And the third
Speaker 1: answer was UK tenor yields will stay above US tenure
Speaker 1: yields for years because UK has a risk premium post
Speaker 1: list trust. That was the most picked answer was that
Speaker 1: the UK tenory yields will stay above US ten yields
Speaker 1: for it. And ironically we ran the Servitceco and ironically,
Speaker 1: in the past two weeks UK tenure yields have completely
Speaker 1: collapsed and are now twenty basis points below ten years.
Speaker 1: So already it's completely blown people up and confounded people.
Speaker 1: And I think this goes back to your story that
Speaker 1: people who get two doomed angry are probably going to
Speaker 1: be confounded. But I don't think that should be mistaken
Speaker 1: for going to going through a session that people called
Speaker 1: forever came, Let's get positive. I don't think that's the conclusion.
Speaker 3: So somewhere in the middle, which is probably the hardest
Speaker 3: story to trade.
Speaker 1: Right exactly, I think that's the problem with the will
Speaker 1: Always money. I think the story is a negative is
Speaker 1: a negative story, but not a dramatically negative one and
Speaker 1: not a clearly negative untiming. And that's why I think
Speaker 1: it's going to become really, really difficult to trade. And
Speaker 1: what does this mean for like things like stocks, because
Speaker 1: if you got foot to one hundred, it normally benefits
Speaker 1: from a cheaper pound because it's got so much external exposure.
Speaker 1: And again, will UK stocks finally start benefiting if we
Speaker 1: have a kind of muddled through, slightly negative story, but
Speaker 1: a weaker sterling that should actually help foot to you
Speaker 1: one hundred? But oh my god, no one ever makes
Speaker 1: money in this stuff.
Speaker 2: What I'm getting from this conversation is that the pound
Speaker 2: is wildly unpredictable and anyone who tries to ben against
Speaker 2: it seems to get burned. What do you think is
Speaker 2: going to happen in twenty twenty fours?
Speaker 3: Yeah, I mean, I do think having gone through a
Speaker 3: kind of can we call it a crisis? Last year?
Speaker 3: Was it a crisis?
Speaker 2: I think we can call it.
Speaker 1: I think we caning had to intervene to sure up.
Speaker 3: Right, let's call it the crisis. Last year's crisis. I
Speaker 3: think that kind of woke people up, and it's just
Speaker 3: anything like last year is unlikely to happen again. And
Speaker 3: actually the survey which which Mark just debunked because it's
Speaker 3: no longer valid after two weeks. But no, but people
Speaker 3: in that survey now, in all seriousness, really don't expect
Speaker 3: that record load to be hit again. There has been
Speaker 3: a little bit of faith restored in the stability of
Speaker 3: the UK government at least when it comes to economic policy.
Speaker 3: Let's see if that lasts heading into what will be
Speaker 3: an election cycle. I think that will be key. And
Speaker 3: if we're looking at cable again, it's not just a
Speaker 3: pound story. The pound is almost kind of subject to
Speaker 3: how people feel about the US or you know, how
Speaker 3: those yields that Mark mentioned or are moving. Because if
Speaker 3: the UK has a higher yielding currency, then it becomes
Speaker 3: more attractive for overseas investment because people just get more
Speaker 3: bang for the book. And also will the UK stock
Speaker 3: market start to get inflows again? Is that a value
Speaker 3: play that people will finally get excited about. I think
Speaker 3: there are a lot of questions. There is a lot
Speaker 3: of negative sentiment around the UK. Interestingly, hedge funds are
Speaker 3: actually still net long the pound, which means that they're
Speaker 3: actually positioned for further gains even though they're trimming those positions.
Speaker 3: I'd be interested to see if they start shortening it,
Speaker 3: because that would be a really strong signal.
Speaker 1: I just looked up the definition of crisis because I
Speaker 1: suspicious accounts of crisis, and it says the first definition
Speaker 1: I found on the internet a time of intense difficulty
Speaker 1: or danger. So under that it's definitely OK. So I'm
Speaker 1: just saying I think crisis is the right word to
Speaker 1: qualify that.
Speaker 2: I would give us a worldly inaccurate prediction then for
Speaker 2: the next year.
Speaker 1: I'm glad you pressed there, because the only kind of
Speaker 1: prediction I can give for the UK. But I think
Speaker 1: it's going to be I think economically it's going to
Speaker 1: be a more negative story than it's currently explanation. So
Speaker 1: the contensus forecasts are for UK to expand a little
Speaker 1: bit again next year, around half percent growth. It kind
Speaker 1: of varies a little bit. I think we will have
Speaker 1: a recession over the next year. In terms of what
Speaker 1: that means for the pound, I think in G ten
Speaker 1: world it's going to be difficult because I do think
Speaker 1: that most of the volatility in that chart, apart from
Speaker 1: around the trust period, is provided by the dollar component,
Speaker 1: and I think that some of the other G ten
Speaker 1: countries have some of the similar problems that UK have.
Speaker 1: That they have countries that are are leveraged to both
Speaker 1: the consumer and housing market that's now being squeezed by
Speaker 1: higher real rates just as global growth is slowing down.
Speaker 1: So it's hard to pick it out, but I have
Speaker 1: to say I think Sterling can continue to underperform some
Speaker 1: of the actual emerging markets with better fundamentals where they've
Speaker 1: already got their books in order, and we always we
Speaker 1: look to the classic cases of things like Brazil or
Speaker 1: Mexico where they height rates really really aggressively and they've
Speaker 1: got real rates there in offer, and now they can
Speaker 1: ease rates as recession is under control. They've got central
Speaker 1: bank credibility, and I think that's the key if you
Speaker 1: think the currencies are going to trade off central bank credibility,
Speaker 1: which many people will say that's probably fair over time.
Speaker 1: The Bank of England is pretty on the list. So
Speaker 1: I remain pretty bearished pound, but I think it's going
Speaker 1: to stay very hard to time.
Speaker 2: You definitely got your serious face on that bit as well, Mark,
Speaker 2: so thank you. We're going to take that as a rap.
Speaker 2: Thank you so much. Mark and Sophia thanks, thank you,
Speaker 2: thanks for listening to this week's in the City. We
Speaker 2: will be back next week, but in the meantime, if
Speaker 2: you like our show, please head on over to wherever
Speaker 2: you listen to podcasts and rate, review and subscribe. It
Speaker 2: helps people find the show. This episode was hosted by
Speaker 2: me David Merritt. It was produced by Summersardi, with additional
Speaker 2: editing by Blake Maples and special thanks to Mark Hadmore
Speaker 2: and Sofia Porta Ecosta.