£1 now around $1.44 What say PropGuy and Brendan R ?
well, if ZIRP (zero interest rate policy) fails to kickstart the economy or put it back on track (this opens the debate of whether it makes to try to push banks to start lending again very aggressively again as it is this type of uncontrolled lending by banks that got us in this mess in the first place, but this is another debate),then quantitative easing may be next in line as an attempt to again kickstart lending.Can someone explain quantative easing and how it will effect the pound in a negative way?Does this include printing money?The BOE chairman has said he may take this step.
If the BOE bring in quantitive easing at their next meeting in 3 weeks as has been discussed,where might the pound end up and how fast?Thanks.it is in correction phase after reaching 1.49 from 1.35, it is expected to correct to more than half way down (1.38-1.37) before moving up again. This is according to fib sequence and trend line analysis.
That is meant to increase the money supply, but not sure what will happen. Lowering interest rates is suppose to lower the value of currency too but last interest cut increased the value of GBP as market rewarded the move on the expectations of growth. On the other hand, this not just 1 currency that is making this move, US$ is going through massive moves of quantitative easing, so if you are comparing with US$ you need to take that into consideration too.If the BOE bring in quantitive easing at their next meeting in 3 weeks as has been discussed,where might the pound end up and how fast?Thanks.
Everything what you are saying, Brednan, is true and makes perfect sense to me. If the government keeps printing money, it won't solve the problem but rather will make things even worse leading to inflation and devaluing of the currency (mainly US dollar). The dollar will simply collapse as a global currency.The problem is the UK is in a very very bad economic situation. It is in the position of the gambler sitting at a table with such a huge loss. Either you call it quit and you try to rebuild but it's gonna be painful but you'll be back. That would be prudent and would show some good risk management.
The other solution, and it is the one favored by the BOE and the government, it is to go all in with a very weak hand. Well, it's called going for broke.
weaker sterling is good for trade but people at home will start crying over inflation. Exports get cheaper but imports get expensive too. How much UK imports for daily consumption?'Speaking on Friday, Prime Minister Gordon Brown continued to suggest that the UK authorities were unconcerned about the pound's weakness, saying the decline in sterling's value has helped Britain's competitive trade position'
So maybe he should take steps to weaken sterling further ?
Well it is good for now, because that is a sign of market stabilizing, but bad later. I don't how it will affect exchange rate, it is too complicated to analyze.Inflation falls less than expected.Good or bad for the pound?
Inflation falls less than expected in January | Reuters