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Any of the Franco/Jermano-philes/Anglophobes care to comment on this?

Blighty going to hell in a hand cart?

The markets say,


I'm none of the above and statistically speaking, I know that resistance levels don't exist, but I'll comment anyway... I suspect this is largely driven by the UK's credit rating. Up until the budget, there was a general belief that a downgrade was likely. Following the budget, that fear seems to have gone away - see gilt yields for evidence. This means that gilts are now a more attractive proposition than much Euro-zone debt. Add in the fact that QE is over and net new issuance is heading upward for the first time in a year as a result, and it's easy to see why the demand for sterling is on the up.

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Good point, where is GOM with his parity-pound claptrap?

Do you remember him trolling the forum with forecasts of £ joining the Euro by Xmas 09?

Gues what? GOM doesn't post here anymore.

Bye-bye muppet


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Will this help the large increase in GDP through export driven recovery.

It depends on what's being exported. You have to look at the value added component to figure out how relevant the exchange rate is. If a company in the UK buys 1M GBP of raw material abroad, adds 100K of value and then re-exports, the exchange rate isn't particularly relevant. If the balance is the other way around then it could cause trouble. I suspect the bigger problem is going to be recession in the main countries the UK exports to rather than the exchange rate though. The UK balance of payments deficit has been falling over the last couple of years, it'll be interesting to see if that continues.

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Will this help the large increase in GDP through export driven recovery.

Good point. The weakness in the Euro ( especially against $) is very good for European manufacturers. Emirates Airlines has placed a $11.5 bn order for 32 A380s and states it will order more aircraft at the Farnborough airshow in September. The German manufacturing economy is humming along and confidence is good. I'm seeing plenty of new shiney European industrial machinery and cars in the Middle East . Audi A7s, BMW 6,7 & 8s, Mercs, VWs and now Seats and even Renaults are creeping in. To be fair there are a good number of Range Rover Sports to keep up the British ( Indian) numbers. Also, plenty of expensive Italian fashion items and lower cost industrial machinery.

I suspect Europe and its leaders are very happy about the Greek crisis causing the value of the Euro to fall. Not so the Yanks or the Chinese who I suspect are steaming mad as Europe drives forward exports and makes huge austerity cuts, throttling off imports.

Frankly, I can see this is only good for Euro currency countries as they export to all those US $ pegged countries that are growing - and even to the good 'ol US of A. They are pretty keen on nice European cars with good performance and fuel efficiency. Better than the dross they make and much much more stylish. They've just been out of reach for many in the USA whilst the $ / Eu was weak.

I hope the UK is benefiting from the EU manufacturing sales drive by supplying components. I'm sure Roll Royce aero engines bring in a fair amount but I can't quite pin point what else the EU manufacturers would want from the UK that they cannot make themselves.

I don't see much effort from Europe to stop all the Euro bashing.

Just my view and it could all be bollx.

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Just my view and it could all be bollx.

That's the great thing about FX rates, nobody really knows which way they're going to go and why. I'm predicting a bit of strong run for the pound for what seem like sound reasons, but I won't be at all surprised to be entirely wrong. The effect of inflation numbers is a good example of why exchange rates are unpredictable: rising inflation should reduce the value of a currency against those with lower inflation, except that sometimes the exact opposite happens since people expect rising inflation to mean rising interest rates which, in turn, make the currency a more attractive place to put money.

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"The UK balance of payments deficit ...."

I'm not wishing to nit pick here, for once in my life but as your posts are worthwhile would you like to clarify that you mean "balance of trade."

We all make these slips.

I'm meaning the balance of all currency transactions in and out:


Balance of trade is a bit more restrictive:


Both deficits have been falling recently I believe. Having said that, I'm not convinced of the accuracy of either number since I read somewhere that if you add them up globally the world has a major trade deficit with itself, which seems implausible.

Edited by tbatst2000
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  • 433 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?

      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%

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