U.K. Printing Press
Bank of England released its Inflation report. Report suggests that “inflation may exceed 2% target in 2012”. Bloomberg story: Bank of England Lifts Forecasts for Inflation, Growth. Is it just me, or it sounds, let’s say, impossible for a country running budget deficits around 12% of the GDP in this and next year; with central bank owning around 20% of gilts issued and counting; public debt raising above 100% of GDP sometime in 2012; rating agencies warning of possible AAA rating removal, and GDP growth projected reaching maximum 2% in couple of years; to escape the recession without massive inflation.
Chart 1. CurrencyShares British Pound Sterling Trust
CurrencyShares British Pound Sterling Trust representing here GBP/USD exchange rate. GBP strengthening in comparison to USD. Despite all the U.S. issues it makes no sense that this continues.