F/X Weekly Comment

As last week's parting shot I highlighted the UK 2nd quarter GDP figures out this week, and how they might disappoint. Well, disappoint they did, and we didn't manage to hold on to the 1.1300 level, ending the week at 1.1289. Unrevised at just 0.2% just isn't good enough, and if UK figures continue to disappoint in this way, we're in trouble.

Complete and utter...
Tosh. I like to keep tabs on what commentators are saying about the markets during the week. It makes an interesting diversion from scouring local fields looking for my lost cat, who of course turns up just after I've set out in the rain... Anyway, sometimes I am reminded of why I'm so happy not to be involved in these markets directly anymore. Take this as an example:
'GBP looks to be playing `catch-up` to the downside this week, after a week of outperformance last week, that may have an underlying cause in corporate flow.'
Ahem, excuse me? What's wrong with 'Sterling's going down the pan, as it should have done last week, and one reason is that companies are dumping it.' That has a more direct ring to it for me. Not that I agree with it though. Sure, the UK is a basket case at present, but surely Europe is a bigger basket, and the bigger they come, the harder they fall? Apparently not the case these days.

Downgrade the ratings, not the country's
You may recall a week or two ago Standard and Poor's saying that the American government was no longer AAA rated. In theory that should make their borrowing more expensive, and boy have they got some debt to fund. And yet despite this, it is still cheaper for the USA to borrow in the international markets than it is for say the UK or France, who both remain AAA rated. What do we glean from this? How about the fact that S&P are themselves hugely overrated?

Southbound
No matter how much I protest, it looks as though we are about to hit another rocky patch against that king of bluff and bluster, the Euro. We probably have ourselves to blame in the sense that we are simply not doing enough to drag ourselves out of the economic mire. When I say 'we' I mean our economic political masters, who insist they are standing firm in the face of adversity whilst actually edging back towards the precipice. Yes, I still think sterling should be at 1.2500, but it could do with some help from those who are most directly involved in steering the economy.
Watch out for the 1.10 level soon if nothing explodes in the Eurozone.