M&G's Leaviss: Time to reduce sterling exposure?

IS STERLING OVERVALUED?

Jim Leaviss, head of retail fixed income at M&G, considers the prospects for sterling following some disappointing UK data points.

There were some reasons to be cheerful in yesterday's UK economic data - second quarter GDP growth wasn't quite as bad as previously thought (the economy shrank by 0.4% rather than 0.5%), and stripping out the weak construction sector, the economy is growing at a reasonable (if below trend) rate. But we also had news that the UK's current account deficit showed a significant deterioration. The gap between imports and exports grew during the quarter, to a deficit of £20.8 billion - equivalent to 5.4% of GDP. Additionally the first quarter deficit data was revised higher by £4 billion t...