The Great Debate UK

Cable: parity is still a long way off but $1.40 beckons

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Jane FoleySince 1982, cable has been contained by the 1985 low of GBP/USD1.0790 and the 2007 high of USD2.0798.  The bulk of this time cable has remained within a narrower 1.40 to 1.80 trading range.

These statistics illustrate how significant it would be if the pound were to slip to parity with the dollar this year.  They have not, however, stopped some commentators speculating about such an event.

The problems affecting the pound are well documented.  The appalling truth is that a combination of low growth expectations for the UK economy and a crippling budget deficit have opened the risks of a funding crisis (if the government does not get the budget in order) or a double dip recession (if too much austerity is introduced too soon).

There may exist a narrow policy path the government could steer that would allow for improved fiscal management and moderate growth but, since the chances of a hung parliament are failing to disperse with just 2 months to go before the favoured election date, it appears likely the new government will lack the backing to take difficult decisions.

Japanese fiscal management dragged into the spotlight

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foley-Jane Foley is research director at Forex.com. The opinions expressed are her own.-

Perhaps the oddest side-effect of the  Greece debt crisis has been its ability to drag Japan’s budget into the spotlight.

Double dip or debt crisis for the UK? Sterling heads lower

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-Jane Foley is research director at Forex.com. The opinions expressed are her own.-

The UK may have clawed its way out of technical recession, but over the course of last week data releases highlighted a sharp drop in retail sales and a surge in the claimant count, a spike higher in the inflation rate and record public sector borrowing.

Women on course to control larger proportion of wealth

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- Jane Foley is research director at Forex.com and blogs regularly for Reuters Great Debate. The opinions expressed are her own. Reuters will host a “follow-the-sun” live blog on Monday, March 8, 2010, International Women’s Day. Please tune in. -

Projections indicate that by 2050 the world’s population will stand at around 9.2 billion, up from around 6.7 million at present.  The vast majority of this increase will be in the developing world.  In developed world countries populations may start tapering off after 2025.

Greece loses a major incentive to stay within EMU

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cr_mega_503_JaneFoley-150x150-Jane Foley is research director of Forex.com. The opinions expressed are her own.-

Germany’s Finance Ministry this week denied a report in Le Monde that Germany, France and other countries were working on a package to rescue Greece. It seems that for now the official line from the grandfathers of European Monetary Union is that Greece can sort out its own budget deficit. The official line from the Greek government is much the same; it continues to maintain that it doesn’t need a bailout.

Little chance of a rate hike until at least Q3

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cr_mega_503_JaneFoley.JPG-Jane Foley is research director at Forex.com. The opinions expressed are her own. -

Bank of England Governor Mervyn King’s speech this week was well timed insofar as it has nipped in the bud a growing fear that inflation in the UK could be lurching higher.

Too soon to predict that EMU will wobble

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foley-Jane Foley is research director at Forex.com. The opinions expressed are her own.-

The budget crisis facing the Greek government has drawn an array of comments and responses from various parts of the European Central Bank, the European Commission, the International Monetary Fund and the financial markets.

A tough spring in store for the pound

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foley- Jane Foley is research director at Forex.com. The opinions expressed are her own.-

The pound has started the year on a negative note.  Ongoing concerns over the budget deficit, an impending general election, the prospect that the Bank of England (BoE) may yet increase quantitative easing (QE) and a drop in consumer confidence are all clouding the outlook.

Tides may turn in the forex market into 2010

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JaneFoley.JPG-Jane Foley is research director at Forex.com. The opinions expressed are her own.-

The final weeks of 2009 have brought a sense that tides may be turning in the foreign exchange market reflecting broader developments in the global economy. The predominant changes relate to the dollar.

Development of the risk trade

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- Jane Foley is research director at Forex.com. The opinions expressed are her own.-

A willingness to differentiate between risk on a country or at a regional level is an important part of the repair process in financial markets.

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