Monday, August 7, 2006

Good time to take a holiday to the US?

Sterling heading for $2 barrier

The shock rise in UK interest rates last week has sent the pound jumping higher against the dollar and other currencies, a trend that may continue. Sterling rose more than two cents to $1.91 on Friday, a 15-month high.

Posted by webmaster @ 12:41 PM (464 views)
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10 thoughts on “Good time to take a holiday to the US?

  • Retiredbanker says:

    “The shock rise in interest rates last week”.

    Well I certainly wasn’t shocked!

    Amazing how such a trivial and long overdue interest rate rise has rattled so many cages. I predict much
    bigger shocks in the not too distant future.

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  • There’s that phrase “shock rise” again.

    Only a shock because the copy-n-paste BBC journos got it completely wrong.

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  • devil's advocate says:

    Not good news, a strong pounds will affect the inflation that we are importing. Any idea why the pound is so attractive.

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  • This is the purpose of raising rates – to make the pound more attractive, raise its value relative to other currencies so that imported goods become cheaper.

    However, if the inflationary run is being caused by rising unemployment and rising energy prices (where demand is fairly constant), I doubt the rise in the value of the pound will keep a lid on inflation.

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  • I fear that IR’s have gone up to lower inflation EXPECTATIONS only, and to convince people that central banks are hawkish on the issue of inflation.Once expectations are subdued, the charlatens will continue with their fraud.
    In actual fact, the whole policy of central banks since Capitalism failed at the turn of the Centuary, is to create inflation via maintaining ‘real’ short IRs lower than the actual rate of inflation. This means that anyone can borrow money cheaper than the real rate of inflation, and as a result, that any investment in assets with borrowed cash will be proffitable. Thus the illusion of growth is maintained.
    This is all that is preventing the full effect of ‘reality’ bringing OECD Nations to their respective knees with a deep depression.
    Inflation is much, much, much higher than reported due to the central bank printing presses attempting to stave off economic collapse (and the resulting social/ political crisises that tends to trigger world wars). This only works while peoples expectations of inflation are contained and the BOE is (rightly) concerned that they will loose all credibility if they to not respond to raised IR expectations with a rise. It will be interesting if expectations are reduced at all as a result of a 0.25 raise!
    I cannot see how Central banks can possibly raise rates above the levels of inflation as this fraud is our only functioning ‘engine of growth’ Oh what a tangled web we weave………

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  • DA, the pounds present value, particularly against the €, is unwarranted. The UK has rising unemployment, little manufacturing, and among developed economies a debt mountain per capita of the population topped only by that of the US. I can only think that Soros must be rubbing his hands together with glee as the goose is plumped up. Little wonder why many commodities traders are still screaming – in reference to gold – BUY! (Sorry if this is little enigmatic.)

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  • We are probably in for a bumpy ride. The Pound may soar as speculators move Dollars to Pounds – and then could crash as they desert to Euros. Seems the BoE left it too late. The run on the Pound seems to have started.

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  • waitingfor hpc says:

    The BOE is too late. Time is now ticking. Inflation in my industry (manufacturing – what is left of it) is over 25% this year alone on average!

    Crash Gordon will get his crown this year for being the WORST chancellor in history!

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  • devil's advocate says:

    How has the run on the pound started its very high at the moment??? Am i missing something, or is it just wishful thinking

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