Sterling Appears Little Priced for U.K. Fiscal Risks
Dow Jones
Oct 06
1252 GMT - Sterling looks vulnerable ahead of the October 28 U.K. budget, Morgan Stanley strategists say in a note. The budget could bring a delay to the consolidation process and lower fiscal headroom, they say. "We see risks to our estimates as skewed towards a bigger headroom hit, as we don't incorporate any major adjustment from lower immigration flows." This implies some insufficient pricing of fiscal risks in sterling, they say. Morgan Stanley recommends selling sterling against the dollar with a target of $1.2850 and a stop loss of $1.3350. Sterling is last up 0.5% at $1.3279.
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