Budget 2010: Insight expects sterling to remain weak

Insight head of currency Dale Thomas expects sterling to remain weak for some time due to the current mix of tight fiscal and loose monetary policy.

As the Budget has come in largely as anticipated, Thomas expects to see no sharp move in broad sterling valuations. However, the manager says spending cuts will reduce demand in the economy and allow interest rates to remain lower than they would under the previous administrations plans. "The positive aspect is that action taken to reduce the deficit via spending cuts not increased taxation should lead to a higher potential growth rate and a lower risk of a fiscal/sterling crisis," Thomas says. "However, there is a lot of policy credibility in the GBP price already. All sterling's ...