roaringmouse

Inflation rate fell in the UK in December.

DownUnderPaddy

...and because inflation rate has fallen, this opens the door for the next round of QE by the BoE come February. GBP/AUD rate may well drop further on that basis resulting from the ensuing additional devaluation of the trusty pound....

http://www.whatinvestment.co.uk/trad...s-for-qe.thtml

BATS666

Every time the markets get the jitters, the AU$ devalues, albeit temporarily.
We saw it just before Xmas when Europe last threw a wobbly. Up from $1.48 to nearly $1.60 then back down again, coz everything is rosey once more (yeah, right!).
If (like me) you are sitting on £s waiting to change to AU$, you just have to pray for GFC2 and then change at a better rate before it all settles down again. If you're lucky, you might get $1.80.
Long term the rate has to be negative though.

chris955

Of course there are also those of us who are hoping it goes even lower, $1.40 would be nice but it isn't going to suit both sides whichever way it goes.

chris955

That's the trouble, everyone is guessing what is going to happen. I remember very clearly hearing that inflation would continue to climb and what happens ? It falls.

DC10

But the "Pound in your pocket" will still be worth exactly the same

Amazulu

Financial 'experts' coming out of BE's wazoo

Sherlock Holmes

You are showing your age!

commonwealth

"UK inflation rate falls to 4.2% in December"
4.2% still high though.
if you're earning 0.5% interest from the bank, you're screwed!
and then convert it to AUD. double screwed.

what I like about Australia is they have the balls to raise interest rates to keep inflation between 2-3%. if you earn 6% on your AUD bank account, you're still better off!

isgraham

What you fail to realise is that inflation is being kept intentionally high in order to devalue the debt we have in the UK. Our debt is going down in value by 4.2% per year by doing literally nothing where as your debt is going down at only 2 - 3 % per year. As the government has huge amounts of debt this is really the only way out for the UK.

carling black label

You cannot devalue or inflate away debt whether private or government with imported cost inflation, and thats what we have. We have ZIRP and QE, this crashes the local currency, so makes imports more expensive. This is resulting in rising prices in the UK. Anything liked to RPI, like Merv's indexed pension is doing nicely, the rest of us proles are suffering.........

The only way to inflate away debt is through wage inflation, which is currently, if you are lucky to have a job, well;

Public Sector wage inflation, 2010, 0%........2011, 0%.....2012, 1%....2013, 1%,....2014, 1%..

Private Sector wage inflation cica 2% to 2.5%

Now that is not going to help very much, its why the buyer of bonds (GILTS), are not worried about inflation in the UK, we are stuffed. Rising unemployment, negative wage inflation, rising costs of essentials....I wonder what effect that will have on big ticket items bought with credit........Deflation me thinks....


This don't bode well for wage inflation...

http://www.bbc.co.uk/news/business-16608394

We are in for a long stagnant lost decade or two here in the UK, unless maybe we have another world war?

commonwealth

And the worrying part is the record level of youth unemployment. That's going to be a lost generation of unskilled inexperienced people and when they grow old they will make UK less competitive when the economies recover. A lost decade and a lost generation of future (un)skilled workers. It could possibly mean a future generation with poor families and higher crime rate. I think last years riots are just the tip of the iceberg.

commonwealth

Well I don't think ordinary folks want high inflation if they dont have a job or if their earnings are stagnant. It erodes the value of your debt but it also erodes your living standards.

commonwealth

http://m.smh.com.au/business/high-do...118-1q6j8.html

Aud tipped to get even higher supported by a strong real economy

''The fundamentals here are good. The banking sector's in good shape and the public sector has very little debt. All those things are working together to get a higher exchange rate against the pound and euro.''

iamthecreaturefromuranus

Perhaps just a small war. How about England vs Scotland?