Sterling under the cosh as markets await key numbers.....
Sunday 12/4/15
Sterling under the cosh as markets await key numbers.....
"Sterling will fall further if Britain dips into deflation" , The Sunday Times, Business p.2
Tuesday sees the release of inflation data for March that may see the UK slip into deflationary territory, with all its attendant implications for lower rates for longer. At the same time, the discussions in the US only revolve around the timing of the next rate rise ...... the direction of the move is not in question. The result ? Sterling is getting hammered on the foreign exchanges against the dollar and reached a 5 year low of 1.4650 on Friday.
Makes perfect sense, right ? Absolutely, although there may be a little more to this. After all, it's often pointed out that a short-term deflationary period, especially one attributable to a specific cause like a 50pc drop in the oil price, is not necessarily a bad thing. And not for the first time, US data for the the first quarter has disappointed. Traders' willingness to jump all over sterling may have as much to do with the prospect of a distinctly market-unfriendly general election result as it does with relative interest rate considerations.
Sterling under the cosh as markets await key numbers.....
"Sterling will fall further if Britain dips into deflation" , The Sunday Times, Business p.2
Tuesday sees the release of inflation data for March that may see the UK slip into deflationary territory, with all its attendant implications for lower rates for longer. At the same time, the discussions in the US only revolve around the timing of the next rate rise ...... the direction of the move is not in question. The result ? Sterling is getting hammered on the foreign exchanges against the dollar and reached a 5 year low of 1.4650 on Friday.
Makes perfect sense, right ? Absolutely, although there may be a little more to this. After all, it's often pointed out that a short-term deflationary period, especially one attributable to a specific cause like a 50pc drop in the oil price, is not necessarily a bad thing. And not for the first time, US data for the the first quarter has disappointed. Traders' willingness to jump all over sterling may have as much to do with the prospect of a distinctly market-unfriendly general election result as it does with relative interest rate considerations.
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