As I ended last month with some stats I figured I would start this month with the numbers. Short of inspiration, I guess.
 
If you bought Sterling and sold euro, or perhaps even sold the Euro Sterling cross, you would be on a winner this month.  Taken in isolation, buying Sterling would have seen a 4 per cent pick up month on month, selling euro would have picked up another 2 per cent gain, stick them together and trading the euro Sterling cross and you would have made close to a 6 per cent gain.
 

 
Sterling made its gains after an austere emergency budget started the UK on its longest period of back-to-back cuts in Government spending since World War II, six years in total, aimed at getting the UK back in black, nearly.  The news was welcomed by the ratings agencies, applauding the necessary, as viewed currently, reigning in the previous borrow-and-spend governments.
 
George Soros has a slightly different view to that of the agencies, while not directing his comments at the UK, instead targeting Germany’s blitzkrieg on budget savings, saying the deep cuts in spending could be a danger to the euro.  He went on to say that Germany’s budget savings were “a recipe for disaster because it pushes the debtor countries into a deflationary cycle and imposes stagnation”.
 
The more commentaries I read the more I’m drawn into the view that interest rates are going to remain low in the G7 for an extended period, growth will be minimal and the route to recovery will be a slow bumpy one. The UK has laid its cards on the table, the EU is joining in. Cuts, in everything, are the new normal. Governments seem to be cashing in on a new Puritanical age, expanding on the current revolt against the previous borrow-and-spend politics.
 
As my colleague is quick to point out, once the pendulum swings too far don’t find yourself in its way on the back swing, or something like that. I may be mixing a couple of sayings, but the point being that the lemming-like rushes rarely end well.
 
The dollar may be down but I don’t think that the Rocky-like currency is out just yet. There may just be a few rounds left in the lumbering lummox.

Disclaimer: The views expressed are the opinions of the writer and whilst believed reliable may differ from the views of Butterfield Bank (Cayman) Limited. The Bank accepts no liability for errors or actions taken on the basis of this information.