Is Sterling A Petro-Currency?

... or are we just a country dominated by a commodities-heavy stock market?  
Or something.  Insert your theory here:

Sterling: Time And Tide ...

Well, that didn't last long ... the Emergency Budget had better be good.

And sooner rather than later please, George.

ND

Sterling - Again

We haven't needed this graphic for a bit, but it needs dusting off again.

Sterling appears to be strongly correlated to Cameron's lead in the polls ...


ND

UPDATE: posted the above @ 13:34, and at 14:20 the fragrant Stephanie Flanders, without a by-your-leave, weighs in with ...

"As the Conservative lead tumbles, so falls the pound"

but I forgive anyone whose father wrote songs like he did. At the drop of a hat-tip ? Have some Madeira, M'Dear.

Outsourcing; a thing of the past?

Just time for a snippet today. I noted this article trumpeted by the BBC. Apparently companies are no longer outsourcing quite so much to India et al and are instead bringing work back on shore. The number one reason is failure of outsourcing to deliver the benefits promised; the curse of the indian snake-oil salesman?

What intrigued me though was the lack of a mention for the good old Pound Sterling. Beaten into submission by profilgate government money printing, our currency is devalued and set to fall further in 2010. This makes UK wages and costs look a little better compared to foreign opposition.

It is small reason to be cheerful if you are a manufacturer; excepting that the cost of all your raw materials is goingt o sky-rocket.

Return of the Pound; Get your summer holiday money now!

The UK Pound Sterling, long-suffering under the control of Mr. A Darling and Mr. M. King, has staged something of a rally these past few weeks.

Not long ago sinking below parity with the Euro was the talk of the town and reaching parity with the US Dollar. But like a phoenix from the flames, the pound has reached nearly 1.15 to the Euro and the US Dollar rate is a mighty 1.64 today.

Behind the rises are a big move in closing short positions on the Pound and also a flight away from the dollar into more risky assets. As such demand for dollars goes down and so the currency falls.

However, there is no sign as to whether this is a longer-term trend coming into play. More likely, this currency reversal will itself reverse when the equity markets end their rally in the next couple of months.

As such, if you are planning a trip abroad over the summer, think carefully about when you buy your currency. Now may be a good time if you can afford to put the money aside. Alternatively, watch the global markets, if there is a strong downturn the currencies will follow quickly, so don't dither.

Sound Pound for the weekend

The pound rallied strongly after yesterday's rate cut. This is the opposite of what normally happens, as lower rates mean that money is transferred out of a currency.

However the reason behind this is that the market assumed the bank of England would say more about quantitative easing - i.e. printing money. The Bank shied away from this, pushing the likelihood of this out by a few months.

The markets like this, printing money is a move of a very bankrupt country - see Zimbabwe, USA etc. Not the sort of thing the Pound should be associated with.

On the downside, we have deflation now, so if we were ever going to print money, now is the time. if we don't ever do it, well and good. If 'QE' happens in 6 months, when the worst of the deleveraging is over, then we will get 1970's style stagflation.

Don't be led by all the talking heads on TV and in the newspapers. Vince Cable on Newsnight was particularly bad last night, he is only feted because Osborne and Darling refuse to speak on Newsnight. QE is a bad idea but if taken is medicine for the worst of the fever, which is now. Not in a few months time....