Sterling slips from three-month high against euro as traders watch French bonds
- Euro stages modest recovery as French bond yields retreat from the brink.
- Bank of England hawks circling; November rate hike priced at 80 percent.
- Morgan Stanley warns of fiscal cliff; bets on pound plummeting before October budget.
- Inflation deeply embedded in UK economy, says policymaker Mann.
Brief Summary
The British pound has backed off its three-month high against the euro as volatility in French debt markets begins to stabilize. After a week of frantic trading driven by fears over European public debt, investors are catching their breath, though the UK currency remains under pressure from looming domestic policy decisions.
Why This Matters
If you hold international investments or plan on traveling across the pond, pay attention. The Bank of England is leaning toward aggressive interest rate hikes, which could make borrowing more expensive and shift the value of your portfolio. Meanwhile, Wall Street analysts are sounding the alarm on the upcoming UK budget, predicting a potential sell-off that could hit the pound hard. Watch your currency exposure closely; when the central bankers start talking and the budget axe falls, the ripples often cross the Atlantic and hit your bottom line.