What Will Entry in EMS Do to Britain's Pound, Bonds?

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Great Britain's entry into the European Monetary System's (EMS) currency snake - widely anticipated by November-December - is expected to spark little immediate trading reaction, analysts say. It may be the subject of a classic "buy the rumor, sell the fact" response, several agree.

How much selling the pound and UK bonds may experience in the coming months depends more on other factors, analysts note, such as a technical topping considerations and the inflation outlook. But inflation is also tied to the question of entry into the ERM (Exchange Rate Mechanism) from a timing standpoint.

If British inflation numbers are still dangerously near 10%, entry into the ERM …