Sterling is not heading towards a crisis, despite the Bank of England manipulating the market, says Credit Agricole's Adam Myers.

SHOWS. LONDON, ENGLAND, UK (JANUARY 8, 2012) (REUTERS - ACCESS ALL)

1. CREDIT AGRICOLE SENIOR FX ANALYST, ADAM MYERS, SAYING:

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(QUESTION: HSBC, RBS talking of a Sterling crisis. I mean, how far would you go?)
Well, I definitely wouldn't call it a crisis. At the moment, foreign exchange markets globally manipulated by central banks and no central bank wants to see a Sterling crisis because in 2012, Sterling was a safe haven and made up a large component of their balance sheets.
(QUESTION: But right now, it seems to be falling against most currencies, right?)
Absolutely. And remember, that is the goal of an exchange rate. When you have economic weakness, the exchange rate is meant to fall to cushion the economy, to cushion the domestic economy and that's what they should normally do unless there's manipulation and intervention by other parties.
(QUESTION: Talking of central banks, which central bank do you think will be first to stop QE?)
The first central bank to stop QE? I think it's most likely to be the Fed.
(QUESTION: What about the BOE? How soon after could the BOE step in do you think?)
Very quickly. Obviously with the Federal Reserve, being the reserve currency of choice, once they stop printing fresh money, I think many central banks will follow particularly the BOE but on a relative economic basis, there's no question that the US Federal Reserve should stop before the Bank of England.
(QUESTION: Ahead of the ECB meeting this week, what are we going to see the Euro do and are you expecting anything from that meeting and what's Euro-Dollar going to look like?)
Well, no question, there's a lot of anxiety from foreign exchange traders in the market at the moment. Given those comments about negative interest rates that we saw at the previous meeting, a lot of uncertainty, I think we're going to see Euro-Dollar tread water until the press conference and then maybe breathe a sigh of relief thereafter and taking back or losing some of those gains that it's made over the last two weeks.
(QUESTION: And Japan it seems stepping in to support the Euro as well, buying some bonds. I mean, how much longer can that support continue from Japan?)
Well, I think you can continue for a while. As I said earlier, we are in the year of central bank manipulation of currency markets and of course, it benefits both parties for those foreign exchange reserves in Japan to be used to buy peripheral bonds in Europe. So, it works both ways, it suppresses volatility and it gives us less to talk about in terms of foreign exchange markets.'