Asian-based asset management firm, Cornerstone Worldwide is rumored to be advising clients to “sell” sterling against the euro, the yen and the US dollar.
Cornerstone Worldwide are reported to have suggested in a research note that following a gloomy inflation report from the Bank of England and a precipitous fall against the US dollar last week, sterling is likely to fall further against other currencies as the extent of the headwinds facing the UK economy become more apparent.
The pound slumped almost 3 percent against the dollar last week, its biggest five-day loss since the period through July 1, 2005, after Bank of England Governor Mervyn King said the housing market faces ``a significant adjustment'' as banks ration loans for homebuyers.
Cornerstone Worldwide are thought to have advised clients to convert cash held in sterling into Canadian dollars or Swiss Francs.
A source close to currency arbitrage traders at Cornerstone Worldwide said that it was unlikely that the UK housing market would recover “any time soon” and that an economy fairly reliant on heavily-indebted consumers as well as financial services was facing a “double whammy” as the credit crunch would continue to hamper orderly operation of the world’s financial markets.
