Banks predict sterling to plummet - papers 18 Dec

Goldman Sachs has advised sophisticated investors take out a "short" position against pound on the derivatives markets as its top trade for 2007, a bet the currency will fall. "The UK remains the largest current account deficit country in Western Europe, with a substantially overvalued currency - about 13% on a trade-weighted basis," said the bank in a client note. Jens Nordvig, a Goldman Sachs currency strategist, said the credit cycle was turning as the Bank of England finished raising rates, ending the yield premium over European investments which has made UK bonds so attractive. ...