Monday, Apr 16, 2007
Where next?
Bloomberg: Pound Rises to Highest Since September 1992 on Rate Expectation
The U.K. currency rose for a fifth day as reports showing accelerating house-price inflation and factory gate prices rising the most in 11 months stoked speculation borrowing costs will be lifted.
Posted by nearly30 @ 12:00 PM (144 views) Add Comment
8 Comments
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1. confused76 said...
This is going to end in tears! The pound is ripe for heavy fx speculation
2. Whiteknight said...
plod. plod. plod.
Thats the MPC hoving into view.
"Not up to the job." on the report card I am afraid.
Stronger then rapidly weaker as it also disappears down the hole.
It is remarkable what this group of mediocre political leaders and financiers have achieved in such a short space of time. Totally sold down the river.
Of course having a lazy entitled population doesnt help matters either.
Heres to the next worthless 0.25 % rate rise and to the 5% or higher rise they will have to do when the currency collapses.
Worthless to a man (or a woman)
3. mrmickey said...
I'm convinced the only thing that will spur the BOE to raise rates with any conviction will be a run on Sterling, the strong pound takes the pressure off the BOE, all they need to do is nudge rates up by .25% every so often to give the impression they give a rat's arse about inflation.
4. paul said...
You're probably right mrmickey, but as soon as the market smells the end of the rate rise run, the move away from sterling could be quick and nasty.
Currency value is extremely volatile, and we've had a long bull run on the pound.
5. confused76 said...
...besides, a too strong pound will put pressure on employment rate in the long run.
IMHO betting against the pound could pay off since BoE at some point will be cornered and unable to keep rising IRs without crashing the housing market and economy with it. I think the George Soros of the world are taking notice and waiting, it is when you have so many things (housing market, economy, debt levels) linked to the monetary policy that good chess players start playing.
6. uncle tom said...
Despite the fact that the pound is riding so high, we still have a massive balance of payments deficit - fuelled by goods bought in dollars - this is destabilising.
The rise of the £ against the dollar should have softened the inflation pressures in the UK, yet inflation is perilously close to going out of range. Meanwhile the pound is hitting the buffers at $2 - it would be very unstable if it went higher than that.
We are now right out of deflationary elements in the UK economy. Higher interest rates seem inevitable. Last year I predicted that interest rates would probably rise to 6% this year - I now think they might top that
7. speculatorone said...
Is this a good time to buy dollars?
And if so what's best/cheapest method of doing so?
8. uncle tom said...
US oil stocks are probably a fair bet - think about Exxon. Also niche US manufacturers like Boeing, Caterpillar and Deere. Forget US treasuries for now - or hard cash.