Outlook: Pound strength
Thursday 06 May 1999
Well, it hasn't happened yet and, not surprisingly, some hard-pressed companies are starting to despair. Some are responding by embarking on another round of lay offs.
It is the strength of the exchange rate that gives the Monetary Policy Committee leeway to cut interest rates again, if it so votes, after today's meeting. The renewed strength of the pound makes it hard to see how next week's Inflation Report could possibly predict an inflation rate which moves above its target range over the next two years.
City opinion veers towards the belief that the MPC will leave rates unchanged today, a decision which would call forth squeals of protest from industry groups. But whatever the outcome, the pound will indeed fall eventually. This is partly because growth in Euroland will ultimately pick up. It is also because if inflation looks like undershooting its target as a result of the exchange rate, UK interest rates will buck market expectations and fall further.
Last but not least, it will happen because the likelihood remains that sterling will join the euro. When the announcement finally comes, there will be a swift decline towards the level the market sees as a comfortable entry rate for the pound. It is one of those neat twists of history that in 1992 it was delinking from Europe that brought the pound to a bearable level; this time round it may be linking up that does the trick.
Diving in at the deep end is no excuse for shirking the style stakes
- 1 Stephen Fry ‘criticises Operation Yewtree in dinner party rant’ calling for tougher laws to deter false sex abuse allegations
- 2 Why I'm on the brink of burning my Israeli passport
- 3 Israel-Gaza conflict: ‘Sderot cinema’ image shows Israelis with popcorn and chairs 'cheering as missiles strike Palestinian targets'
- 4 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
- 5 War is war: Why I stand with Israel
Ian Thorpe gay: Olympic swimmer comes out in Parkinson interview
Gaza-Israel conflict: Pro-Palestinian demonstrators take to streets of London, Paris and New York in wave of protests
Israel-Gaza conflict: ‘Sderot cinema’ image shows Israelis with popcorn and chairs 'cheering as missiles strike Palestinian targets'
Israel-Gaza conflict: Israeli air strike destroys home for the disabled killing two women residents
Israel-Gaza conflict: Israeli PM says conflict may 'continue for a long time' as hundreds of Palestinians flee their homes
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...