Note

THE BALANCE OF PAYMENTS WILL BE A TAILWIND FOR THE EURO – SOCGEN

· Views 36


EUR/GBP is rising again. Kit Juckes, Chief Global FX Strategist at Société Générale, notes that Europe’s balance of payments is more euro-friendly now. 

UK consumer spending decoupled from GDP – temporarily

“The current account surplus peaked in 2018, before slipping into deficit in the year to August 2022. Long-term capital outflows, driven by bond flows, surged in in 2020-2021. The capital account picture improved through 2022, but the current account went the other way. Now, things are set to improve: Lower energy prices will turn the current account around, while higher rates/yields, and the pivot from QE to QT, will provide plenty of Euro-denominated bonds for investors to buy. There are debt issues to worry about, but the Euro will benefit.”

“Real spending dramatically out-performed GDP in 2020-2022 in the UK but higher inflation has brought that to a dramatic end. The nominal series is much less volatile, but it looks as though, until inflation falls, 2023 will be payback time after the over-spending of the last three years.”

 

Disclaimer: The content above represents only the views of the author or guest. It does not represent any views or positions of FOLLOWME and does not mean that FOLLOWME agrees with its statement or description, nor does it constitute any investment advice. For all actions taken by visitors based on information provided by the FOLLOWME community, the community does not assume any form of liability unless otherwise expressly promised in writing.

FOLLOWME Trading Community Website: https://www.followme.com

If you like, reward to support.
avatar

Hot

No comment on record. Start new comment.