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17 Feb 2014
Flash: GBP eyes on the Vodafone sale - BBH
FXStreet (Barcelona) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman, notes the relevance of the Vodafone's sale of its participation in Verizon.
Key Quotes
"UK: Sterling was easily the strongest of the major currencies last week, rising a little more than 2% against the US dollar. It was ostensibly bolstered by the rise short-term yields as the market responded skeptically to the BOE's forward guidance."
"In the days ahead there may be another influence. Vodafone's sale of its 45% stake in Verizon."
"Some 133,000 UK shareholders will receive an average of GBP3500 and Verizon shares. February 21 is when the foreign exchange and share prices will be fixed."
"While UK shareholders are the largest, foreign investors are also substantial. Payouts are slated for March 4.>Income and consumption will likely be boosted on the margins by the payout."
"Moreover, this involves the transfer of an asset (valued around GBP80 bln) from the FTSE 100 to the S&P 500. This will force indices and tracker funds to re-weight when the new Vodafone shares start to trade (February 24)."
"Separately, the UK reports CPI and unemployment (Tuesday and Thursday). The risk is the year-over-year rate ticks up from 2.0% in December, while the unemployment rate is likely to be steady at 7.1%. The data, like the minutes from the recent BOE meeting, have likely been superseded by last week's Quarterly Inflation Report, which broadened the central bank's forward guidance, while maintaining the need to low rates for longer."
Key Quotes
"UK: Sterling was easily the strongest of the major currencies last week, rising a little more than 2% against the US dollar. It was ostensibly bolstered by the rise short-term yields as the market responded skeptically to the BOE's forward guidance."
"In the days ahead there may be another influence. Vodafone's sale of its 45% stake in Verizon."
"Some 133,000 UK shareholders will receive an average of GBP3500 and Verizon shares. February 21 is when the foreign exchange and share prices will be fixed."
"While UK shareholders are the largest, foreign investors are also substantial. Payouts are slated for March 4.>Income and consumption will likely be boosted on the margins by the payout."
"Moreover, this involves the transfer of an asset (valued around GBP80 bln) from the FTSE 100 to the S&P 500. This will force indices and tracker funds to re-weight when the new Vodafone shares start to trade (February 24)."
"Separately, the UK reports CPI and unemployment (Tuesday and Thursday). The risk is the year-over-year rate ticks up from 2.0% in December, while the unemployment rate is likely to be steady at 7.1%. The data, like the minutes from the recent BOE meeting, have likely been superseded by last week's Quarterly Inflation Report, which broadened the central bank's forward guidance, while maintaining the need to low rates for longer."