The British Pound sank to new all-time lows against the Euro, as the market is counting on more interest rate cuts in the UK. What is interesting to note that with all the cynics out there saying how lousy the US economy is and that the Dollar is a "has-been" currency, it's not the only major currency to get hit.
This news follows the Bank of Israel raising rates by 0.25%, this move was made in part to slow down potential inflation. The currency markets are at a crossroads. In some countries the dreaded inflation has already arrived, and central banks have no choice but to raise rates. Other countries are doing their utmost to stay out of recession and have relaxed a tight money policy, trying to create more money supply.
2008 promises to be an exciting year in the Forex markets as the inflation/slow growth war is played out among the world's currencies.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position in any stock mentioned as of 12/24/07.
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