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Strompy

Pound Soars

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Wednesday during early deals, the British pound soared to a new multi-month high against the yen and new multi-day highs against the currencies of US, Europe, Switzerland as positive economic reports from U.K. showed that the economy is on the road to recovery.

Why?

One forum expert has predicted that the pound will plummet to 0.70USD. Yet it has risen 1.64USD. Why?

Globilisation?

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There is no reason to think that a strengthening pound points to a recovery, unless a falling property market also indicates recovery. The only meaningful way to measure the strength of an economy is to look at living standards, there isn't a number that we can make go higher and we will all be rich.

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Why?

One forum expert has predicted that the pound will plummet to 0.70USD. Yet it has risen 1.64USD. Why?

Globilisation?

Take a look at the 3yr and 5yr charts and you'll see a completely different picture. Against most major currencies we're still waaaay down > 30% for most of them

All we're seeing is a bounce back from historic lows - not too surprising given that pretty much EVERY major economy is suffering

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There is no reason to think that a strengthening pound points to a recovery, unless a falling property market also indicates recovery. The only meaningful way to measure the strength of an economy is to look at living standards, there isn't a number that we can make go higher and we will all be rich.

It's fair to say that things could be just as bad or worse elsewhere and that is why the currency is strengthening agaist other currencies.

Currency investors may feel more confident keeping their money in Sterling at the moment especially while other economies are reluctant to put there cards on the table and make public just how bad things really are.

Only this week, there was a call to the European banks to admit their losses & exposure, which they still haven't done.

At least here, most of the damage has been done and we know just how bad things are and it's really bad, but it's reasuring to investors that they can see the risks and manage them accordingly. I believe that the Eurozone is the next big casualty on the horizon. The cracks are showing everywhere! To be fair, USA is in danger again too! What a mess!

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It was oversold and is just reclaiming lost ground. Also, when the stock markets are up, the pound, like the euro, is a currency that gains. It still has much potential for appreciation, but expect it to drop again like a stone when the recent stock-market gains grind to a horrible stop. Right now, I would say the euro is overvalued and sterling is undervalued. It is sometimes hard to remember that almost every developed nation with a fiat currency has something horribly wrong with it.

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No one is more shocked than me by this, i suspect £ are being bought to pay off debt by someone. Gordon got a lot of crap over the falling £, therefore one is wondering WHY he not shouting about its climb?

Mike

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The strengthening pound is the fulcrum upon which our double dip recession will hinge.

The economists suggest that manufacturing growth, which was in great part, a function of the weak pound, will lead to improved GDP figures. However, the service part of the economy is collapsing and the strengthened pound will choke off the prospect of a continuing manufacturing recovery. Fourth quarter 2009 will be disastrous. imo.

We could see sterling back in the 1.90s before the end of summer.

Mind you I put two £uid on England winning 8-nil tonight, dyor.

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No one is more shocked than me by this, i suspect £ are being bought to pay off debt by someone. Gordon got a lot of crap over the falling £, therefore one is wondering WHY he not shouting about its climb?

Mike

One posible reason is that multinational British companies are repatriating foriegn currencies into Sterling to take advantage of the best rates to do this for almost 8 years. It can add 30% to 40% to thier profits.

Same thing drove the dollar higher at the onset of the financial crisis. The US multinationals were worried about funding so they repatriated foriegn reserves into dollars meaning that the fed had to issue dollars to foriegn central banks at a unprecedented levels.

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The strengthening pound is the fulcrum upon which our double dip recession will hinge.

The economists suggest that manufacturing growth, which was in great part, a function of the weak pound, will lead to improved GDP figures. However, the service part of the economy is collapsing and the strengthened pound will choke off the prospect of a continuing manufacturing recovery. Fourth quarter 2009 will be disastrous. imo.

We could see sterling back in the 1.90s before the end of summer.

Mind you I put two £uid on England winning 8-nil tonight, dyor.

Uk manufacturing had to compete on a global stage with rates at 2 to 2.10USD to the pound for 2 to 3 years. so 1.90 is still a 5 to 10% increase in thier competitive position. Also Oil and commodities are priced in dollars so in your case thier input costs decrease as well so they win both ways.

No wonder you put 2 quid on Engerland to win 8 nill.

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One forum expert has predicted that the pound will plummet to 0.70USD. Yet it has risen 1.64USD. Why?

You've answered your own question.

Clearly he was no expert at all. ;)

This website really should come with a financial health warning. :lol:

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Take a look at the 3yr and 5yr charts and you'll see a completely different picture. Against most major currencies we're still waaaay down > 30% for most of them

All we're seeing is a bounce back from historic lows - not too surprising given that pretty much EVERY major economy is suffering

Exactly right, been saying this for some time now.

Even at current levels the £ is pricing in A LOT MORE BAD NEWS than the Eurozone.

JCT and Angela M just keep trying to sweep their huge problems under the carpet.

It won't work. Watch this space.

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Sterling has reached its highest level against the euro since the start of the year after data suggested the UK recession may be over.

http://news.bbc.co.uk/1/hi/business/8094729.stm

What I don't understand is why, despite our recklessness as a nation, Sterlng is holding up, the indicies never fell past 2003 lows, and much of the world appears to be in a more desperate situation than us right now. Our medicine must be coming our way, surely?

Edited by Kyoto

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http://news.bbc.co.uk/1/hi/business/8094729.stm

What I don't understand is why, despite our recklessness as a nation, Sterlng is holding up, the indicies never fell past 2003 lows, and much of the world appears to be in a more desperate situation than us right now. Our medicine must be coming our way, surely?

Discussed here earlier today

http://www.housepricecrash.co.uk/forum/ind...howtopic=116840

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Our medicine must be coming our way, surely?

Oh yea of little faith.

This is the miracle economy, from NuLabour.

You can write reality here if you wish, but it wont be good for your soul, so just let the spinning lunatics prevail.

Don't fight the machine.

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http://news.bbc.co.uk/1/hi/business/8094729.stm

What I don't understand is why, despite our recklessness as a nation, Sterlng is holding up, the indicies never fell past 2003 lows, and much of the world appears to be in a more desperate situation than us right now. Our medicine must be coming our way, surely?

woo hoo!!!!!

good news.

now all we need is for Brown to get run over by a bus and my day is made.

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Does this mean imported inflation will fall, so QE can be increased further?

If the currency can take it then stressing it further shouldn't hurt.

http://www.statistics.gov.uk/cci/nugget.asp?id=199

Published on 10 June 2009 at 9:30 am

The UK’s deficit on trade in goods and services was £3.0 billion in April, compared with the deficit of £2.7 billion in March (originally published as a deficit of £2.5 billion).

The surplus on trade in services was £4.0 billion, compared with a surplus of £3.8 billion in March.

The deficit on trade in goods was £7.0 billion, compared with the deficit of £6.5 billion in March (originally published as a deficit of £6.6 billion). Exports rose by £0.1 billion, while imports rose by £0.7 billion.

The deficit with EU countries was £2.9 billion in April, compared with a deficit of £3.1 billion in March. Exports rose by £0.4 billion but imports rose by £0.1 billion. There was a rise in exports of chemicals.

The deficit with non-EU countries widened to £4.1 billion compared with the deficit of £3.4 billion in March. Exports fell by £0.3 billion and imports rose by £0.5 billion. There was a rise in exports of oil, offset by a fall in exports of capital goods. There were rises in imports of consumer goods other than cars, and aircraft. There was a fall in imports of oil.

Excluding oil and erratic items, the volumes of exports and imports were both three per cent higher in April than in March.

Export prices fell by two per cent compared with March, and import prices fell by one per cent.

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I dont think the pound is soaring, I think the others are falling....DOLLAR: huge QE and debt EURO: large debts at banks, Eastern Europe, two broken countries.

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woo hoo!!!!!

good news.

now all we need is for Brown to get run over by a bus and my day is made.

And then for a passing motorist to reverse over him three times just to be sure.

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I dont think the pound is soaring, I think the others are falling....DOLLAR: huge QE and debt EURO: large debts at banks, Eastern Europe, two broken countries.

No, you will see that it is not because of euro weakness, as the euro continues to do well against the greenback. It is just recovering lost grounds. That's all currencies do, go backwards and forwards. But I am surprised at this continuous rise against the euro. You would expect some retracement. Or are the poisons finally hatching out of the mud (copyright RB) in the Eurozone?

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I wouldn't call it soaring rather than correcting. The pound was worth 2 dollars and 1.50 euros not that long ago remember.

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Does that mean we're not going to hear anymore "Cash rich foreign buyers taking advantage of the weak pound to snap up properties cheap"?

hope so - it was starting to irritate me

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