Mark O'Sullivan sees the sterling/euro pair as one to watch, and testing times ahead for central bankers and the Bank of England
There's no doubt that the good economic times of the 'Goldilocks scenario' - measured by low unemployment, low interest rates, low inflation and strong growth - are well and truly over, and indeed there are some very dark clouds on the horizon. In the UK, the BoE has been reeling from a round of punches that began with the Northern Rock crisis and led to inflation moving above 3% (forcing Mervyn King to write to the Treasury to explain this), and has since been aggravated by a slowing housing market and the threat of stagflation, as wage increases fuelled by higher energy costs push infla...
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