Just another week in paradise

This was one for the ages. Just look at the weekly charts: a 22.5 cent drop in the pound in a single week. 9 cents in EUR/USD, 22.5 yen in EUR/JPY.

We used to see moves like this back in the 1980s and 1990s when the Europeans would competitively devalue their currencies against the mark. A few other episodes compare: The run up to the first Gulf war, the ejection of the pound from the Exchange Rate Mechanism, the months long chaos that followed the Asian financial crisis…The “Great Moderation” of the early 21st century is well and truly dead.

Have a great weekend all. We’ll check in from time to time…