Pound (GBP) Quietly Moving Higher!
The British pound has been in stealth rally mode over the past week despite the risk aversion in the market and the declining economic picture in the UK which was exemplified by teh rioting that took place there recently.
Earlier this week, the release of the Bank of England rate policy meeting minutes revealed that the last two hawks on the committee changed their stance from hawkish to neutral, meaning there is very little chance of a rate hike despite CPI data that showed rising inflation at 4.4%.
With the economy looking bleak in the UK thanks to fiscal austerity measures put in place by the government, the next move for the BOE may be to actually be more accomodative with monetary policy to attempt to mitigate the slowdown.
So why is the Pound moving higher if this is the prevailing sentiment? Because the markets appreciate fiscal responsibility, and not reckless spending by governments hell-bent on buying the votes of its populace to maintain political power.
Pay attention US, the markets are speaking to you!