Sterling rallies after rate cut

IveSeenTheLight

The pound has hit a two-month high against the euro, after the Bank of England slashed interest rates to a record low to tackle the recession.
The UK's central bank cut rates from 1.5% to 1%, while the European Central Bank left rates on hold at 2%.
The perceived pro-active stance of the Bank of England, compared to the ECB, saw the pound rise above 1.15 euros for the first time since early December.
Sterling also saw gains against the dollar, rising to $1.4767.
Rally derailed
However, the pound fell back later in the morning after official data showed the biggest annual fall in UK manufacturing output since 1981.
At 1040 GMT, sterling was trading at 1.1473 euros and $1.4703.
After ECB President Jean-Claude Trichet insisted that zero rates were not appropriate at the moment, despite the growing recession in the eurozone, currency traders attacked the euro.
But sterling's rally against the dollar could be be short-lived, with many experts predicting further losses in the coming months.
The pound has fallen significantly against the dollar in the last year. In March sterling stood at $2.03.


http://news.bbc.co.uk/2/hi/business/7874130.stm

Rochdale_Pioneers

I posted this yesterday - the pound went up like a rocket when the rate cut went through.

The facts are simple - the Eurozone is just as screwed as we are with less room to manuever. The press here pay no attention to the crashing economies in Europe, to their bank bailouts and fiscal stimuli, but the markets do. There is no hiding place for traders, no safe haven they can park all their money in to ride this out. Sterling took a hammering because the UK economy was talked down like we were uniquely in trouble. Now they see we're not and its swinging back.

OK so we're all screwed is probably a worse position globally than its just Britain. But it does explain the stampede-like currency swings of recent months.

Really2

Rochdale_Pioneers wrote: »

I posted this yesterday - the pound went up like a rocket when the rate cut went through.

The facts are simple - the Eurozone is just as screwed as we are with less room to manuever. The press here pay no attention to the crashing economies in Europe, to their bank bailouts and fiscal stimuli, but the markets do. There is no hiding place for traders, no safe haven they can park all their money in to ride this out. Sterling took a hammering because the UK economy was talked down like we were uniquely in trouble. Now they see we're not and its swinging back.

OK so we're all screwed is probably a worse position globally than its just Britain. But it does explain the stampede-like currency swings of recent months.

I did it even earlier.:p

Really2 wrote: »

Check out the money markets.

The market must have factored in a bigger cut.

Big jumps agains the $ and the euro (we were down slightly thismorning)

No one thanked me though:(:D

purch

There you go .........

Now if I could only dig me way out to the office, I might be able to square up !!!!!!!

Really2

purch wrote: »

There you go .........

Now if I could only dig me way out to the office, I might be able to square up !!!!!!!

Cheers purch, love you too.:)

Good luck with the snow. I found out the last few days why I like cars with a manual gearbox (especialy with hills, snow and ice involved)

Generali

Really2 wrote: »

No one thanked me though:(:D

Oh you poor old thing. I think DFW is the board for (((hugs))) though. I thanked you anyway and I'll make sure I Thank something I disagree with deliberately to make up for it.

FWIW, my opinion is that there's a big political risk with the Euro that doesn't exist with Sterling or the USD for example.

If inflation rises quickly, the Germans will probably quit the Euro. The Italians and French would see inflation before depression. The 2 will be irreconcilable ultimately, IMO.

purch

http://newsvote.bbc.co.uk/1/hi/business/7874225.stm

The rise in the Euro is really helping the Frogs (garlic muching surrender monkeys.....as Clarkson would say)

France's trade deficit hit 55.7bn euros ($71.4bn; £48.6bn) in 2008

Generali

purch wrote: »

http://newsvote.bbc.co.uk/1/hi/business/7874225.stm

The rise in the Euro is really helping the Frogs (garlic muching surrender monkeys.....as Clarkson would say)

France's trade deficit hit 55.7bn euros ($71.4bn; £48.6bn) in 2008

UK's trade deficit = US$ 178,600,000,000 according to The Economist:

kennyboy66_2

Generali wrote: »

UK's trade deficit = US$ 178,600,000,000 according to The Economist:

"Merchandise" only though.

Does nothing else count.

Generali

kennyboy66 wrote: »

"Merchandise" only though.

Does nothing else count.

Trade in services also counts IMO. It can be hard to measure though.

Wookster

Rochdale_Pioneers wrote: »

OK so we're all screwed is probably a worse position globally than its just Britain. But it does explain the stampede-like currency swings of recent months.

No one knows what currency is the bigger pile of pooh.