Good site for the US$ / GBP Trend for the future ?

Question

Thanks

David Millen · Accepted Answer

Outstanding!   I don't often laugh out loud in the run up to Christmas.

Jonathan Bryce · Answer

xmas · Answer

i'll forgive you - its xmas after all :) you know what i mean - for "us traders" xmas wrote:

Jonathan Bryce · Answer

Anything that is known about the relative strengths / weaknesses in the respective currencies is already reflected in current spot prices, except for the differential in interest rates - such that if you bought USD and put it in a deposit account there, you would on average end up with the same amount of money as if you put it on deposit in GBP over here. Indeed, if you hedged against currency movements by buying a future contract, the only difference would be the transaction costs, and the fact that as a foreigner, you might not get as good a rate as a native would get.

news outlook · Answer

That's true, as far as it goes, but what is not known is what Gordon and Melvyn will do if there is heavy selling of GBP in the first half of 2008 as interest rates are reduced. That will drive inflation up, possibly quite a lot (*). Will the MPC be brave enough to raise interest rates again in late

2008, or will Gordon panic and shoot it in the kneecaps? Don't forget, he created the MPC and he can close it down or make it irrelevant, given a good enough excuse. What would that excuse be? If Gordon is desperate for re-election, the temptation to keep rates down and let inflation rip, so bailing out angry homeowners, might be too strong. And if the currency markets think the UK has gone soft on inflation, sterling could fall a long long way. All that political uncertainty is not reflected in the exchange rate.

(*) Anyone done the calculation?

Good site for the US$ / GBP Trend for the future ?

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