Wednesday, January 21, 2009
Commodities have plunged, and so has the value of the Pound. By my reckoning, the Pound is now somewhat undervalued relative to its purchasing power parity level, which I calculate to be about $1.45. It's been a lot weaker in the past (e.g., 1984), so if currency markets do their typical thing (e.g., overshoot) then we could see even more Pound weakness (and by inference more dollar strength).
Posted by Scott Grannis at 12:20 PM