Rob's 20th guest post on Saving the Euro.
Market Indicates...
Well irrespective of what Merkozy or Nick Clegg says about Cameron's decision the markets have stirred a little and are beginning to express their views – foreign exchange wise at least.
Euro/$ is finally going down – trading at 1.3175.
GBP/Euro – possible a better indicator of what they think – is slowly creeping up to 1.1825 – the strongest it has been for about the last 9 months.
In the polls, Joe Public has expressed support for his actions – always a good sign, and something that the markets do take in to consideration.
However, we have a long way to go before we see whether or not it was indeed the right decision.
I personally think that he was right to use the veto as the "Tobin" tax for example would have been incredibly unfair – the UK would have ended up paying around 35% of the total amount forecast. Also, unless it was a "global" tax it simply wouldn't have worked in the long run – even if only one country had opted out, the markets are highly mobile and would have simply re-located to that country to avoid paying the tax.
The UK may now actually be in a stronger position from being on the "outside" of the Euro Zone Plus group, especially if they want to use institutions formed in the EU, so the terms isolated and marginalised may be a little too dramatic, but that is the press for you.
I think that we are now in "wait and see" mode – being December, many operations have scaled down their trading volumes, and if a head of steam does build up, it won't take much to really move the markets.
The key level for Euro/$ is 1.30, and for GBP/Euro 1.20 – if they are broken we could be off to the races in a big way.
__________
The author, Rob (not his real name), works in one of UK's largest charities.
I personally think that he was right to use the veto as the "Tobin" tax for example would have been incredibly unfair – the UK would have ended up paying around 35% of the total amount forecast. Also, unless it was a "global" tax it simply wouldn't have worked in the long run – even if only one country had opted out, the markets are highly mobile and would have simply re-located to that country to avoid paying the tax.
The UK may now actually be in a stronger position from being on the "outside" of the Euro Zone Plus group, especially if they want to use institutions formed in the EU, so the terms isolated and marginalised may be a little too dramatic, but that is the press for you.
I think that we are now in "wait and see" mode – being December, many operations have scaled down their trading volumes, and if a head of steam does build up, it won't take much to really move the markets.
The key level for Euro/$ is 1.30, and for GBP/Euro 1.20 – if they are broken we could be off to the races in a big way.
__________
The author, Rob (not his real name), works in one of UK's largest charities.
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