Doge Falling, Commodity Boom and Scottish Independence

11 Mei 2021

The main event of the weekend was the epic firing of the Doge token after Musk jokingly (or seriously) confirmed the idea of ​​the host of the Saturday Night Show that the cryptocurrency was a scam. A drop of 30% is a very serious reason to think about the future of the crypto-currency-meme, which, thanks to Musk's PR, almost reached the moon (meaning the price of $1 per token).

And then the head of the Bank of England recalled the consensus opinion among financial professionals about cryptocurrencies: "Cryptocurrencies have no intrinsic value and those who speculate with them need to be prepared to lose all their money."

Note that the demand for cryptocurrencies is one of the derivatives (perhaps the most extreme case) of the overall rally, when an excess of cheap money provokes a rise in prices across almost all ranges of financial markets.

Let's now cast a glance at the commodity markets for example. The Bloomberg Commodity Index has updated its highest levels since 2015. At the same time, the price of iron ore on Monday soared by 10%, and copper renewed its all-time highs.

The pound was also aiming to reach the highest levels since spring 2018 yesterday. On the one hand, the basis for this agility was provided by the dollar, weak after the disastrous data on the NFP. On the other hand, the markets are counting on a sharp growth in the UK economy in connection with the country's exit from the lockdown.

What would happen to the UK economy if Scotland leaves it? The Scots generate about 8% of the Kingdom's GDP. And this question is not so hypothetical. The fact is that last week's elections allowed the political parties advocating the independence of Scotland to gain full control over Parliament (72 out of 129 seats). Their next step is obvious: an attempt to hold a referendum on independence. And although Johnson will obviously refuse, it is unlikely that this will stop the Scots. In any case, we should expect a permanent negative background for the pound on this issue in the foreseeable future. But Britain has not yet recovered from Brexit and the pandemic. In general, a pound at 1.41 is a fair price to sell it in the current realities and prospects.