Forex Focus: Sterling's outlook is as grey as the British weather There are hints that the incoming Governor of the Bank of England, Mark Carney, will devalue the pound by 10 to 15pc. Charles Murray of FC Exchange (www.fcexchange.co.uk) says: "There is a strong chance he will devalue the pound in an attempt to increase growth through a stronger export market. With the UK no longer a major manufacturing nation and much of its food and energy coming from abroad, it's a risky option trying to use the trade channel to improve growth, and as its track record shows, there is no guarantee this will work. As Vimal Popat of VPFX Consulting (www.vpfxconsulting.com) points out: "The argument of devaluation helping the general economy is a weak one. We're not really a manufacturing nation any more so any decline in sterling's value will actually hurt the core businesses driving our growth that are reliant on a stronger pound. Tor FX's Josh Ferry Woodard (www.torfx.com) agrees: "The shallow boost in exports from a weak pound is unlikely to make much difference in the grand scheme of things, due to the subsequent increase in the price of Britain's imports." But Chris Towner of HiFX (www.hifx.co.uk) is more upbeat. Importantly, going forward, the outlook for the UK for any further downgrades is stable and there is evidence that the Government's funding for lending scheme is bearing fruit while the employment market remains stable. We must remember that foreign exchange is a ratio market and therefore we need to weigh up the outlook for the UK with the outlook for Europe. Smart Currency Exchange's Charles Purdy (www.smartcurrencyexchange.com) also looks on the bright side. Our exports are more competitive but the trouble is that our main market of Europe has huge problems. However the knock-on effect of this has been positive as we have found the rest of the world open to our products. Of course, the pound is not the only currency suffering. The rand has taken a hammering. It has fallen 15pc against the pound since February. This is a result of being hit by a lethal combination of factors - strikes by miners demanding up to 60pc wage increases, inflation, lower growth and huge losses in the prices of gold, silver and copper. "The rand is likely to see a further sell-off as substandard growth data sinks in to a region with high unemployment, poverty and inequality," says Murray. Lower prices have hit most of the commodity currencies of Australia, New Zealand and Canada, which have fallen around 10pc this year with reduced demand from China seeing commodity prices weaken. The Aussie dollar which has had a phenomenally strong run for years has braked hard. The Australian dollar in particular is over-valued and we expect to see a further reversal in fortunes for this currency. GBP/AUD at 1.80 is no longer a mirage, but more of a probability," says Towner. Cook agrees: "You can easily see AUD weaker over the course of the year."