Sunday, June 26, 2016

British pound sterling / stocks - don't be played

You shouldn't look at your 401k loss from Thursday and instead should look at it from Wednesday. Or May 19th.  Go ahead.  Look back a month.  You are even Steven.   

The pound was irrationally momentarily stronger before the Brexit vote.

The headlines are the pound went down in value by 9%.  On Thursday it took 67 pence to buy a dollar and on Friday it took 73 pence to buy a dollar.  See A in the chart.

But in February, B, the pound required 72 pence to buy a dollar. Which is only 1 pence stronger than on Friday

Besides, cheaper money relative to other currencies is what the central banks are all about. So the Brits get an advantage here benefiting their export economy.

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