The Financial Fixed Odds update from David Evans, Market Analyst, BetOnMarkets.

 
Yesterday the British Pound was absolutely hammered, there’s no way of sugar coating it.

The fall has been attributed to yesterday’s dire business investment figures.

Billionaire investor Jim Rogers believes that Sterling could collapse within weeks.

Here’s what he said (hat tip to the FT)

“The UK Pound is on the brink of a collapse which will herald a downturn worse than 2008/9, it could well happen within weeks and the British government is powerless to prevent it.

“And this in turn will foreshadow a global economic winter that could come before the end of 2010 and make the last two years seem like a mild spring day.

“Other currencies aren’t strong and the Euro has real problems, with cracks much wider than Greece beginning to show,” Rogers continues, “but it’s the Pound that’s most vulnerable.

“In real terms, it’s already devalued against virtually every currency barring the Zimbabwean Dollar and it’s especially exposed over the weeks running up to the UK election. In a basket of currencies, the Pound is potentially a basket case. And that will put Britain in an extremely bad position for the shakedown.”

It should be noted that Rogers has been predicting said collapse for some time and while it’s certainly depreciated, it cannot be said that it has collapsed… yet.

What about his assertion that the Pound is devalued against virtually every currency?

Let’s have a look at the performance of Sterling against all major currencies since January 2008 (and the Icelandic Krona, just for comparison, I couldn’t get the Zimbabwean Dollar data)

So we can see that barring the Icelandic Krona, the Pound has devalued by an average of 1/5th, and by nearly 40% against the Yen.

The Pound has certainly been lower against the US Dollar and Euro in the depths of 2009, but now it’s reaching multi year lows against the likes of the Australian, New Zealand and Canadian Dollars.

It’s also true to say that other currencies were hit hard yesterday, like the Australian Dollar, but since 2008, it’s clear that the British Pound has been the weakest major currency overall.

For comparison, here’s the performance for 2010 so far:

Hardly a bed of roses either, with even the Icelandic Krona gaining on the Pound by 2.43%.

British Krona anyone?

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