To the surprise of many commentators, the proud pound since the beginning of the year was the best among the major currencies. Against the dollar it rose by 3,4%, while, as the euro gained 1.5%. Even more impressive was the growth of sterling to the major currencies last year: the franc, he added 5% and 4% of Aussie and Japanese yen.Earlier this year, widespread expectations that the pound has to suffer this year with the economy, subject to severest cuts in public spending for more than a generation and the continuing decline in real incomes. However, in general, the economy has demonstrated an enviable fiscal stability to reduce, at least for now (despite the reduction in GDP in the fourth quarter).
In addition, Britain could become the first advanced economy, which began tightening monetary policy in response to the continuing and rising inflation. Inflation was not less than 3% throughout 2010, and culminating in the December figures are shocking in 3,7%. As a result, the expected start time of policy tightening by the Bank was abruptly reversed. In fact, it is possible that the Bank of England raises base rate is already at its next meeting on February 10.
Since the beginning of the year, the yield of the two-year dzhilts jumped by 55 basis points to 1.37%, reflecting a sharp revision of the forecasts of growth rates. Increase the likelihood of higher interest rates in Britain contrasts with the situation in the U.S. where the Fed reaffirmed its commitment to the conservation rates extremely low for a long time, and where they are fighting against the fear of deflation. In Europe, the ECB could also raise concerns over inflation, but only if the test countries PIGS difficulties hike from the ECB is still unlikely in the near future.
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