U.K. Pound 'Slowly' Becoming Haven Currency, Standard Bank Says

U.K. Pound 'Slowly' Becoming Haven Currency, Standard Bank Says

Bloomberg August 8, 2011 04:00 AM Copyright Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Monday, August 8, 2011

Aug. 8 (Bloomberg) -- The pound is "slowly" becoming an alternative haven currency amid concern that the Bank of Japan and Swiss National Bank will sell their nations' currencies to weaken them, according to Standard Bank Group Ltd.

Investors fleeing the euro and dollar may buy sterling, Steve Barrow, London-based head of research for Group-of-10 currencies, wrote in an e-mailed report today, citing the U.K.'s "swift" deficit reduction measures and low risk of a credit- rating downgrade.

"Sterling has lost significant ground to other currencies since the credit crunch," Barrow wrote. "This has left the pound in a competitive position. Another issue is that the U.K. government arguably tackled its post-credit-crisis deficit problem more swiftly than the likes of the U.S. and euro zone."

The pace of the pound's appreciation may be constrained due to growth risks, Barrow wrote. He predicts sterling will strengthen to $1.80 and 75 pence per euro "on a one-two year horizon, not one-two months," the report said.

Sterling gained 0.1 percent to $1.6413, as of 10:51 a.m. in London. It last traded at $1.80 in Sept. 2008. The pound weakened 0.2 percent to 86.91 pence per euro and last touched 75 pence against the 17-member common currency in February 2008.

--Editors: Matthew Brown, Keith Campbell

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