Bond Outlook [by bridport & cie, April 18th 2007]
There was a time when inflation in the UK led to a weaker currency to maintain a semblance of international competitiveness in trade terms. Now, the effect is quite the opposite: the strong likelihood of the BoE lifting the bank rate further has pushed Sterling to uncomfortably high levels. Within the much tighter standards for inflation reigning today, the UK economy is overheating, along with the euro zone, whereas the US economy is not. |
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