I really don’t know much about economics and the intricacies of how and interest rates are set by the Bank of England, looking at this market from Paddy Power is a bit like pinning the tail on the donkey for me.
My theory on this market is that is Project Fear turns out to be very close to Project Reality then Sterling will seriously and quickly tank as we head to No Deal.
The only time I can remember a similar situation in my lifetime was the legacy of Margaret Thatcher’s final act of European integration came under attack from the Brexiteer bogeyman George Soros on Black Wednesday.
Back in 1992 interest rates were raised from 10% to 12% then a further increased was announced to 15% so raising interest rates is one lever to stop your currency tanking, albeit in 1992 the government set the interest rates, now that power resides with the Governor of the Bank of England. The interest rate increases were cancelled the next day but my hunch any increases will last longer especially given that how historically low current interest rates are
On that basis I think the value is backing the 14/1 on interest rates being 2% or higher at the end of the year but perhaps PBers can convince where the value in this market is. Over to you.