Pound Sterling is fascinating these days, first rising yesterday morning from 1.5598 at midnight to 1.6097 around noon, or 499 points in 12 hours - but then falling back to 1.5747 in the next 12 hours, only to bounce to 1.6047 again so far today.
What is causing these wild currency swings?
The reason seems to be that really bad data releases (see below) are inspiring forecasts of bigger-than-expected rate cuts tomorrow, maybe as much as 100 bp.
These days a big fat interest rate cut is currency-supportive (see Australian Dollar). Well, with Stark saying things are worse than we think in Europe, why isn’t the euro exchange rate getting the same boost? Possibly because nobody thinks the ECB would do anything as outrageous as surprise the market with a European interest rate cut of more than 50 bp tomorrow, and maybe not even that.
Maybe if the ECB cuts interest rates by 1pc we may see Spanish and French banks willing to issue spanish and french mortgages
Buy For Now
Barbara Rockefeller
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1 comment:
Very very informative details. You made us easy instead of surfing. Thank you for those matured reasons too.
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