GBP Sinks To Lowest Point Since 1985

The pound has sunk to the lowest level since 1985 today as fears of a recession loom

GBP Sinks To Lowest Point Since 1985

Is the stock market turning around? After a dramatic reordering earlier in the year, signs show a new direction. 

Over the past three months, commodity prices have fallen dramatically, which could impact the inflation data. The price of corn has dropped 24% over the past three months, while wheat prices have fallen by 27%, and soybean prices are down by 14%. 

Last month, the Bureau of Labor Statistics reported that inflation, based on the consumer price index (CPI), hit 9.1% in June, a 41-year high.

Experts believe that global inflation has now passed its peak and investors should now reevaluate their portfolios and explore new opportunities. The assets that flourish in times of low inflation and low-interest rates, namely growth stocks and bonds, both started to recover.

Looking to the future, as the frequency of extreme weather events looks set to grow, the future could be even more bleak. - Caleb Silver - Investopedia

After a fall in US inflation last month, expectations of a further decline are gaining ground. This prompts investors to think interest rates may have peaked. When inflation peaks that high, the Federal Reserve tends to raise short-term interest rates to tame inflation. Higher interest rates, in theory, are meant to tame inflation, slowing demand amid rising prices.

U.S. gross domestic product (GDP) has contracted for two quarters in a row, often used as a rough shorthand for spelling out a recession. But the unemployment rate is low, and corporate earnings have come in strong this summer, thus far.

Value stocks are starting to make money again. Sometimes there is little expectation of future growth; indeed the earnings of some may be expected to decline, however, value stocks tend to be mature businesses, sometimes challenged by newer, nimble rivals.

Growth stocks are the opposite: they may make little or no money now, but investors expect rising profits in the years ahead.