Pound Sterling GBP Forecast Steady Despite Osborne Announcement of UK / China Share Market Links

September 22, 2015 - Written by John Cameron

STORY LINK Pound Sterling GBP Forecast Steady Despite Osborne Announcement of UK / China Share Market Links

UK, China Partnership Inspires Foreign Currency Exchange Movement

Investors holding the Pound Sterling (currency : GBP) may be interested to learn that UK Chancellor of the Exchequer George Osborne in planning to forge close links between the London Stock Exchange and China’s equities markets. Shanghai’s benchmark SSE Composite closed at a record high of 5,166 on the 12th June but the three months which followed brought an alarming collapse.

Chinese Stock Volatility Could Spell Trouble for Pound Sterling (GBP) Exchange Rate Trading

The final week of last month saw the same SSE Composite tumble to its lowest level since last December, dropping to a closing level of 2,927. The retracement of over 43% represented the most pronounced Bear Market seen in the equities world for some years and triggered losses for global share markets. Most experts believe the wild gyrations for Chinese stocks over the past twelve months have been driven by the fact that 90% of share market participants in the nascent economic superpower are relatively unsophisticated private investors.

The SSE Composite has stabilised since the end of last month and yesterday’s close came at a slightly more respectable 3,186, but most analysts suggest that the support which Chinese shares have found in recent weeks has been driven by large scale intervention by the Chinese authorities.

Pound Sterling Exchange Rate News: GBP Fluctuates against Rivals like USD, EUR Today

So why does Osborne want to bring the LSE closer to its volatile Chinese counterpart? The Chancellor explained earlier today that, ‘whatever the headlines, regardless of the challenges, we shouldn't be running away from China.’ In a clear case of attempting to hitch his wagon to a star, Osborn went on to assert that China comprised, ‘a phenomenal part of the world economy,’ and suggested that Asia’s number one economy is, ‘a very important part of Britain's economic future.’

Thus far, London’s stock exchanges have given Osborne’s proposals a firm ‘thumbs down’, with London’s headline FTSE 100 shedding over 2.0% of its value on the day. Meanwhile, the smaller cap FTSE 250 club has lost a lesser amount. The Pound Sterling has, however, held up well so far against the sixteen other most actively traded global currencies on the day.

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