Richard Driver Currency Market Analyst SMMT Open Forum 20 - PowerPoint PPT Presentation

Richard Driver Currency Market Analyst SMMT Open Forum 20 September 2011 Caxton FX 4 Grosvenor Place, London, SW1X 7HJ Call us on: 0845 658 2223

Sterling Outlook Sterling Overview Sterling /Yen Sterling /Euro Sterling /US Dollar Sterling /BRIC Currencies Follow @CaxtonFX on Twitter for currency and press updates Call us on: 0845 658 2223

Sterling Overview • Undervalued • Low growth • Low interest rate/Quantitative easing? BUT: • No intervention • Safe-haven appeal? • Tough on debt AAA Follow @CaxtonFX on Twitter for currency and press updates Call us on: 0845 658 2223

Sterling/Yen • Struggling economy/Rock bottom interest rate • Political instability/High Debt- Loss of AAA • But GBP/JPY close to all time lows of around 1.20. Why? • Safe haven • Repatriation of funds • Carry trade reversal Follow @CaxtonFX on Twitter for currency and press updates Call us on: 0845 658 2223

Sterling/Yen • What can curb yen strength? – Solution to debt crisis – Upturn in global growth/Increased risk appetite – Currency Intervention. Outlook 6 months 12 months 18 months 119.00 139.00 150.00 Follow @CaxtonFX on Twitter for currency and press updates Call us on: 0845 658 2223

Sterling/Euro • Hawkish ECB: Interest rate differential • Asian sovereign diversification • Sterling weakness - € 1.10 • Dovish ECB outlook • Escalating debt crisis – High debt/Negative Growth= debt downgrades – Record Bond yields ->Bailouts – Contagion – ECB bond-buying – Bailout fund inadequate, German patience wavering, Weak European Banks, Slower Eurozone growth Follow @CaxtonFX on Twitter for currency and press updates Call us on: 0845 658 2223

Sterling/Euro • Greek default • Italy and Spain • Long-term solution? Eurobonds? Outlook 6 months 12 months 18 months 1.20 1.22 1.16 Follow @CaxtonFX on Twitter for currency and press updates Call us on: 0845 658 2223

Sterling/US dollar • Dovish Fed • Ultra-low interest rates • Carry trade • Economic soft patch • Debt downgrade BUT: • Safe-haven • Uncertain outlook Follow @CaxtonFX on Twitter for currency and press updates Call us on: 0845 658 2223

Sterling/USD Outlook • Near-term dollar to outperform • Beyond – debt downgrades, dovish Fed 6 months 12 months 18 months 1.55 1.63 1.70 Follow @CaxtonFX on Twitter for currency and press updates Call us on: 0845 658 2223

Sterling/BRICS GBP/CNY • Booming economy • Soaring Inflation/ Gradual appreciation 6 months 12 months 18 months 10.0 9.70 9.60 GBP/BRL • Rate Cut • Slowing Growth 6 months 12 months 18 months 2.85 2.95 2.7 Follow @CaxtonFX on Twitter for currency and press updates Call us on: 0845 658 2223

GBP/BRICS GBP/INR • Interest Rate Differential • Slowing Growth/High inflation 6 months 12 months 18 months 77.5 80.0 75.0 GBP/RUB • Commodity decline 6 months 12 months 18 months 49.50 52.00 48.00 Follow @CaxtonFX on Twitter for currency and press updates Call us on: 0845 658 2223

Any questions? Caxton are pleased to provide free currency reports on request. Please contact Currency Analyst Richard Driver. Email: richard.driver@caxtonfx.com Tel: 0207 201 0561 Follow @CaxtonFX on Twitter for currency and press updates Call us on: 0845 658 2223