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Daily FX
Chinese Investment into UK Bank Sends Pound Soaring
Monday July 23, 4:48 pm ET
By Kathy Lien, Chief Strategist strategist@dailyfx.com
The British pound continues to be one of the biggest beneficiaries of US dollar weakness. The drop in house prices has been offset by the news that one of China?s state owned banks has bought a 3.1 percent stake in Barclays, one of the UK?s biggest banks. Valued at US$5 billion, this stake could grow to $18.76 billion (with the help of Singapore?s Temasek Holdings) if Barclays manages to win the bid for ABN Amro.
With 1.2 trillion in reserves, China is on a buying spree. Over 2 months ago, they announced that they will be starting their own investment fund. After investing $3 billion into Blackstone, China has now diversified across the Atlantic. The market is also continuing to talk of 6 percent rates in the UK despite mixed economic data. Tomorrow we are expecting CBI industrial trends orders; strong numbers could mark another multi-decade high in the British pound.
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