Chapter 1165 The Pound Will Depreciate
London, UK.
Once upon a time, this was the center of the world. Once upon a time, the British Empire was a place that the entire British people missed so much. But now, Britain is just an ordinary second-rate capitalist country. Although it is one of the five permanent members of the UN Security Council and has nuclear bombs, they are all in the hands of the Americans. Any national policy of Britain also closely follows that of the United States.
Fortunately, the war against the Soviet Union did not drag Britain into it.
Britain has been watching from the sidelines, watching the Middle Eastern armies wreak blood and gore in Israel, watching Alaska being torn away from American territory, and watching the southern states of the United States begin to riot. At least, Britain is still very calm.
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Isabella, an ordinary London girl, is walking hurriedly on the street. She has a slim figure and wavy hair draped behind her, which makes her look sexy and mature.
This is her daily schedule. After getting up at six o'clock, she eats some bread and milk at home, and then walks to work for half an hour.
Walking can exercise your body, keep you slim, and save on transportation, killing two birds with one stone.
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Thinking of the pigeon-cage-like house she had just bought, Isabella felt a little scared. She had to make money quickly to be able to repay the high loan.
The light blue uniform she wore only highlighted her good figure. After half an hour's walking, she felt her underwear was a little wet.
Even so, she still ran a few quick steps and finally caught up with the elevator of the building. When she punched in, it was just the time.
Panting and holding a stack of documents, she sat down in a chair at the end of the conference room. Before work, a daily regular meeting was a must.
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"Our economy is very special recently. As an investment company, we hold the investors' funds in our hands. We must be cautious. We can only make money, not lose money." The speaker was the company manager John. When Isabella first entered the company, John was a very confident person, but now, John's words lacked confidence.
Of course, all of this has to start with the reunification of East and West Germany.
After a war of unification, the two Germanys finally merged. East Germany invested a lot of money to help West Germany's economic recovery. At the same time, it also improved West Germany's social welfare and social security. As a result, the German government had a large budget deficit, which aggravated inflation, caused currency depreciation, and the exchange rate of the mark against the US dollar fell.
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At the same time, a large amount of US dollars was flowing back to the United States. The United States certainly would not allow this to happen, and the decline of the mark also made Germany feel pressured.
Therefore, Germany took a series of measures, such as significantly raising the central bank's interest rate, to stimulate the rebound of the mark.
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At the same time, other European countries were in a period of economic recession and they urgently needed to cut interest rates to stimulate economic recovery. These things combined led to a large amount of funds flowing into the mark, while other countries' currencies weakened accordingly, the most serious of which were the Italian lira and the British pound.
At the same time, this is also the confidence of capital in Germany. With the strong support of the Soviet Union and Germany's original industrial strength, it is conceivable that the rise of the German economy is inevitable. Therefore, capital can only bring benefits if it flows into Germany.
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For the UK, the large outflow of pounds has led to a sharp deterioration in the UK economy, and the pound is also facing serious risks.
Now, there are only two options, either Germany cuts interest rates to reduce the inflow of foreign funds, while Italy and the UK raise interest rates, or the German central bank intervenes in the currency market, sells marks and buys pounds. If both options fail, the depreciation of the pound will be inevitable!
For an investment company, it must be able to clearly analyze the direction of the economy in order to determine the investment targets. If it fails, the bankruptcy of the investment company is inevitable.
"Now, let's talk about your opinions," said John.
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Brainstorming. When John himself is unable to judge the trend, it is also okay to listen to the opinions of his subordinates. After all, everyone here is an investment elite.
There were many different opinions, and finally, it was Isabella's turn.
"I think our government will definitely not be able to maintain a fixed exchange rate. As long as there is an influx of foreign capital, the depreciation of our pound is inevitable." Isabella said: "As long as we seize this opportunity, we can make a lot of money."
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The depreciation of the pound is inevitable! Isabella's words stunned everyone present. How could it be possible?
As British people, they are still very confident in the British economy. How could Britain allow the pound to devalue!
"Tell me your reasons." John's eyes lit up.
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"First of all, it is impossible to get the German government to cut interest rates. The Germans attach great importance to currency stability. One of the main tasks of the German Central Bank is to combat inflation. As long as Germany still has a budget deficit, they will never cut interest rates." Isabella said: "Now, Germany has joined the Soviet camp. The strength of the German mark has a great impact on the Soviet ruble system. The Germans are even less likely to use marks to buy pounds in order to save the British economy. If the Germans make any move, it will definitely be to short the pound."
Germany is a European country, but now it is in the Soviet camp! Britain has always been hostile to the red countries. Now, if Germany makes any move, it will definitely not help Britain, but pit Britain!
When they heard the words "short selling the pound", everyone felt a buzzing in their heads. Although they were operators of investment companies, they were British after all. They shuddered at the thought of someone maliciously manipulating the pound exchange rate and hitting the British economy.
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"Go on." John's eyes were still shining.
"Recently, I have been studying the trend of our pound. At the same time, I also found that there is a lot of funds financing in our market. A large amount of pounds has been incorporated, which has led to the stability and improvement of our pound's exchange rate. However, this is only a flash in the pan." Isabella said: "Capital is profit-seeking, which is the only creed of our investors. I can infer with certainty that these funds will suddenly attack at some point, sell all pounds, buy German marks, and force our central bank to take over. If the central bank's foreign exchange reserves are not enough, that is, the amount of short selling is too large, the central bank's counterattack will fail, the pound's exchange rate will fall, and our current linked exchange rate system will float freely. If we follow suit and invest, we can earn the direct interest rate spread brought about by the depreciation of the pound, and we can also make a lot of money on foreign exchange futures and stock index futures."