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The Pound And The Dollar Falling

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I have been watching the dollar / pound exchange rate closely, hoping to see the pound fall against the dollar. Why? Oil. If the pound falls inflation will rise, but if the pound is strong any oil related inflation will be off set. So the last week or so has been a bit disappointing, but not unexpected.

DrBubb pointed out in his threat earlier today "Stuck with a Fiat currency",

With the US Congress denying China's wishes, are the Chinese about to shift their reserves away from Dollars? The market seems to think so.

So I figured if the Chinese were dumping Dollars then the dollar would be falling as well! It is :)

That means the Fed will need to act to stave off importing oil inflation. Remember the US is about a year behind the UK in this cycle, so their consumer sending is somewhat stronger than it is over here. That provides a "pull" in terms of spending, and a "push", interms of rising costs, to inflation. Fed will know this, so they are likely to keep tightening at a "measured" pace. Which means of course that UK rates will have to start going up again sometime soon.

China is the key to the whole thing. As Napoleon said, "Let China sleep, for when China awakes the whole world shall tremble." He was right. China is awaking as a global economic power and will very soon have the power to suck in the very life blood out of the Western economies in terms of investment and jobs.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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