To Start Talking About The Pound

Since I've been in the UK for about 2 years already, and will continue to be in for another 3.5 years, national issues have begun to be important already, since money's involved. One interesting political headline is the nationalisation of Northern Rock. It's an interesting issue because firstly it's the first bank run in nearly a century. Secondly, it has damaged the UK, notably the City's reputation, as a financial centre.

After the announcement of the nationalisation bill today, sterling pound's exchange rate fell by 0.5% to the dollar, and on a more relevant comparison, fell by another 0.006% to rm6.28 to the pound. It's been in a sort of a freefall since last October when the subprime issue started affecting Q3 and Q4 performance results in the US.

Comparatively there's also been a slowdown in the UK, (note, when I say the UK I don't include Scotland, no one actually does that) as seen with slowing home sales, and rising defaults. So the Bank of England has cut rates from 5.75% to 5.25% since December. However, a cut in rates and a drop in the exchange rate due to multiple factors has led to higher import costs, raising the CPI. So the wide perception is that the Bank will not cut rates below 4.75%, because of fears of inflation.

Oh well, I hope the pound doesnt fall anymore because I'm going to Amsterdam and I need more euros!! Let it fall against the ringgit hahahaha! It's good for students.