Will the drop in inflation cause UK pound to rise or fall?

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oneill
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Debate with facts!


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Quady
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Against what...?
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A Mysterious Lord
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How can this be debated? A drop in inflation means the pound is worth more, this is a fact.
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Quady
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(Original post by A Mysterious Lord)
How can this be debated? A drop in inflation means the pound is worth more, this is a fact.
Because it makes a rate rise less likely so the forward yield of sterling drops...?
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nixy49
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(Original post by oneill)
Debate with facts!


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Well, it's a fact the banking system is dishonest / imperfect. Implies market forces / indicatorscan be are manipulated..... rather like interfering with the pressure gauge and safety valve on a boiler......

Some vested interests say there's simply no alternative. Like all major advances though, there were no precedents...
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Observatory
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(Original post by nixy49)
Well, it's a fact the banking system is dishonest / imperfect. Implies market forces / indicatorscan be are manipulated..... rather like interfering with the pressure gauge and safety valve on a boiler......

Some vested interests say there's simply no alternative. Like all major advances though, there were no precedents...
There are plenty of precedents of states directing investments instead of the market; they just didn't work as well.
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gr8wizard10
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Drop in inflation matched with expansionary monetary policies such as QE or lower interest rates may de-value the currency. Lower savings rates = Hot money flows out of the country so demand for sterling falls. It's dependent on whether or not expansionary monetary policy takes place and to what extent. That's my long-run hypothesis however. Inflation is 1.9% so I wouldn't expect to see much fluctuation in the value of the £ as of now.
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nixy49
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(Original post by Observatory)
There are plenty of precedents of states directing manipulating investments instead of the market; they just didn't work as well.
A manipulated market isn't really an honest free market..... but yes, they don't work.....well they do for the parasitic sector. But hey, that's imperfection for you.
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Rakas21
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(Original post by A Mysterious Lord)
How can this be debated? A drop in inflation means the pound is worth more, this is a fact.
Future expectations - Had the market priced in a larger fall the pound may have weakened.
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