Remember those hazy days at the beginning of March? It was obvious, innit: a hung parliament spells doom to the pound. Since then, the possibility of a hung parliament has remained just as strong (see Betfair)
and yet the Pound is up. From the $1.50 level to $1.54. Nothing spectacular: just enough to confirm my hunch that this is not “tories down, sell the pound’. The sort of dumb stuff that Tory newspapers were and are desperate to believe.
Although FT Alphaville have every reason to pick on him, it was not just Jim Rogers. Every saloon bar economist thinks that you can go from 1. not remembering what the UK produces (read Policy Exchange’s recent report on manufacturing) to 2. assuming the pound should fall.
Why is the pound up? Perhaps the unemployment figures – stronger economy, stronger finances, safer gilts (gilts are also up today). Perhaps the mildly hawkish BOE minutes. It is not likely to be eurozone strength: they have weaker prices than since the Euro was brought in. Nor inflation in the US, which is still kinda missing. Though if the UK is going to outgrow both these it might be good for the pound, it might just as easily translate into even more export weakness, more QE, and the other direction.
Unsurprisingly, though dismayingly for armchair political pundits determined to use their rules of thumb to dictate messages linking the Pound to Political Weakness, I think the direction of sterling is something to do with economics. I have no idea where it is going, but don’t think it will be much to do with the latest gossip about Liberal Conservative alliances, no matter how well informed.