Archived IMT (2009.10.11)

STERLING DYNAMICS. The Centre for Economics and Business Research (CEBR) report due on Monday predicts the future setting of UK fiscal and monetary policies to drag GBPUSD to $1.40 and lift EURGBP above parity. With all the talk about painful cuts in spending and increases in taxes, CEBR also expects the Bank of England to increase its quantitative easing target by 75bn from the current 175bn. News that Barclays is planning to spin off 4bn of collateralised loan obligations (CLOs) from its balance of sheet in order to tackle its toxic asset load may give a short-term boost to the currency. GBPUSD has not been spared by the periodic source of negative news from BoE, economic data or investment banks. Rallies in GBP remain temporary and $1.5780, 0.9370 remain key short-term targets in GBPUSD and EURGBP. WATCH ASHRAF Monday on BLOOMBERG discussing US FX policy choices at 9:15 am GMT (10:15 BST)