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Sterling Bears


davidcameron
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And as a percentage of GDP and hence the currency base, the UK and US are the same. Since the US is 5 times the size of the UK (it has just over 20% of global GDP while the UK has just over 4% of global GDP) then having 20% of global manufacturing output is the same as 4% of global manufacturing output for the UK.

It's no better or worse. We are the 51st state dontcha know.

Edited by AvidFan
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And as a percentage of GDP and hence the currency base, the UK and US are the same. Since the US is 5 times the size of the UK (it has just over 20% of global GDP while the UK has just over 4% of global GDP) then having 20% of global manufacturing output is the same as 4% of global manufacturing output for the UK.

It's no better or worse. We are the 51st state dontcha know.

I was surprised China wasn't No.1. Now adjust for their population, doesn't seem such a big deal.

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I was surprised China wasn't No.1. Now adjust for their population, doesn't seem such a big deal.

That's it for Chinese export-driven growth by the way. Next stage: consumption. But only after they blow up this decade, and sooner than you think.

It's going to be rough for the emerging markets and the US too.

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The number of people buying into Sterling is very alarming at the minute. Still lets see where their loyalty lies went the housing market turns septic again and the printing press is fired back up.

Strange Sterling is viewed as very cheap and a good currency at the moment - especially to those who are not very economically informed. I was on a plane (flying from UK) one day and a passenger was trying to spend all her left over currencies. She kept digging but did not got quiet enough and then she told the stewardess that she doesn't want to spend her GBP (presumnly she think it is good to keep it)...

Britain as an empire is still fresh in the mind of people outside UK....

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I must admit that I have been surprised by this remarkable rally in Sterling from a high of 2.13 3 years or so ago to a low point of 1.37 and now strorming ahead at 1.58 and likely to break 1.60 this week.

What is powering Sterling?

Is it our 4-5TRillion government debt?

Is it our reliance on HPI to keep the banks going?

Is it our ever widening trade deficit?

Perhaps its something to do with our rising unemployment now at a record since 1997?

Is it more to do with the fact that the EU and the US are in trouble? I think that is your answer. But for those that look a little further ahead: if our 2 biggest trading partners are in trouble could that be behind our widening trade deficit that needs a higher Pound like a hole in the head?

Bottom line: make hay while the sun shines, Sterling is doomed to drop hard later this year. Its HPI driven and the government cuts, higher unemployment and ever increasing deficit will take us down hard.

Most sensible post in this thread so far.

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Most sensible post in this thread so far.

And yet, Sterling bears with bets on against the pound are going to have to accept the fact that it is 20% undervalued on a trade weighted basis, our current account deficit is coming in at just over 2% and all the leading indicators are pointing up for the UK.

The UK is the ONLY economy that hasn't been given the benefit of the doubt re. recovery. Australian house prices and currency are booming, Canada's too. Good news from the major Eurozone economies, Singapore, even Japan of late with super-strong exchange rates. It doesn't make the slightest bit of sense for the UK not to feature in the global "recovery", however fake.

Edited by AvidFan
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The number of people buying into Sterling is very alarming at the minute. Still lets see where their loyalty lies went the housing market turns septic again and the printing press is fired back up.

As goes HPI so goes Sterling.

As it has always been, so will it always be.

We may see a few more months of minuscule drops (less than 1%) but could well see some bigger ones once unemployment kicks in. So far, the bad news on this front has been softened by the growth in PT employment. The perception continues that all is well here as the Koalishon is working and the credit rating agencies have still pegged us at "negative" which is acceptable now that everyone is becoming less risk averse following the stress test euphoria last week.

Short term: Sterling strong.

Medium term: ?? depends on HPI

Long term (2011) : back below 1.50, well below IMO.

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And as a percentage of GDP and hence the currency base, the UK and US are the same. Since the US is 5 times the size of the UK (it has just over 20% of global GDP while the UK has just over 4% of global GDP) then having 20% of global manufacturing output is the same as 4% of global manufacturing output for the UK.

It's no better or worse. We are the 51st state dontcha know.

The UK exports twice per capita of than the US. I guess the US must be an irrelevant economy ..

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The UK exports twice per capita of than the US. I guess the US must be an irrelevant economy ..

I read that somewhere. 20% exports versus 10% for the US.

But that's because we're an open-market economy. The US is more introverted.

Wait and see just how introverted China will be. Think 5% exports in the long run, exactly the opposite of the West and how it is now, the means by which it launched itself.

Edited by AvidFan
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Kind of. Strong sterling in the short term will put the skids under the housing market, which will then put the skids under sterling.

But these things take time - and the above chain of events could take 12 months to play out.

Agree. Unemployment is a massive lagging indicator. Austerity will not become a reality until winter has long since set in.

Do you know a single soul who has lost a job recently?

I do know of one person who lost their job. A freind "sold" here house a couple of months ago and just found out that the bottom feeder in the chain got laid off and the entire chain collapsed. I nearly busted a gut laughing (not in my friend's hearing as it has really screwed her up) but it does seem that unemployment is slowly creeping into the marketplace.

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Agree. Unemployment is a massive lagging indicator. Austerity will not become a reality until winter has long since set in.

Do you know a single soul who has lost a job recently?

Quite. I totally agree this a cyclical bull market for sterling and the UK, not secular. Next year, we're headed South. But not "parity with the dollar" South.

I really can't see it going below £1.42 or even PPP at $1.50. Maybe when the US picks up in earnest in 2013... maybe then.

But the point is - the oil price will really start to bite right at that moment.

Then what do you do with an economy that consumes 1b/$1800 GDP (the US) versus 1b/$3600 GDP (UK). You put all your money into the economy that has the highest oil efficiency of course.

Edited by AvidFan
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1 GBP =

1.58899

We should see 1.60 by the close at this rate.

Sterling is being bought as even the Swissie sells off. It is now everyone's favourite. Invisible Elephants do exist.

It seems to have backed off a little from its flirt with just over 1.59. I'm sure this is only a blip though as people fill their boots with Sterling. They can have mine if they want, all of it, I'll take 1.70 :D

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Quite. I totally agree this a cyclical bull market for sterling and the UK, not secular. Next year, we're headed South. But not "parity with the dollar" South.

I really can't see it going below £1.42 or even PPP at $1.50. Maybe when the US picks up in earnest in 2013... maybe then.

But the point is - the oil price will really start to bite right at that moment.

Then what do you do with an economy that consumnes 1b/$1800 GDP (the US) versus 1b/$3600 GDP (UK). You put all your money into the economy that has the highest oil efficiency of course.

I also see the Pound at around 1.45.

In the meantime, it is on a skyward trajectory on the good news in the US economy:

High:

1.590

Low:

1.568

Now:

1.589

From 1.56 low today to 1.59--that is an incredible climb.

Must have been some really good news on the UK economy today. Anyone know what it was?

Edited by Realistbear
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They are not nursing their losses as they are Times/Telegraph/Sun traders. That they could not see that ConLib was attempting to sort the mess out and that the markets would like is deafening.

However, note when stock markets plummet this Summer/Autumn $ will go to the moon v everything else. May not go as high as 1.3 v £ as that would be retest of £ low which I suspect will fail.

Correct! And the increase in exports that was being touted at the new dawn will be more difficult to maintain if the £ maintains its upswing.

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Must have been some really good news on the UK economy today. Anyone know what it was?

As you say: EU - had it. US - second downturn and potential monetary easing (every leading indicator heading South).

UK = all indicators pointing up, no HPC to be seen, so "all good".

On a like for like basis, we're baby bear's porridge right now.

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The UK exports twice per capita of than the US. I guess the US must be an irrelevant economy ..

I read that somewhere. 20% exports versus 10% for the US.

But that's because we're an open-market economy. The US is more introverted.

Wait and see just how introverted China will be. Think 5% exports in the long run, exactly the opposite of the West and how it is now, the means by which it launched itself.

Far more to do with that fact that the UK is a very near neighbour to many large and rich economies.

Hence sandwiches to France.

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It would be a rash man to bet against further Sterling appreciation in the near term.

rgw40w.jpg

Agree. Sterling is ona powerful run ATM. Everything is selling off and piling into it. Despite rising unemployment, no viable plan to reduce the 4-5TR debt and interest accruing faster than the reductions in spending can keep up with.

The Traders are happy to risk all and the big ones are waiting to pull the plug to make a fortune on the shorts. Much like Buffet's pendulum--when the herd are beginning to pile in SELL!

When will the pound turn? When HPI is reported as -1% or more MOM.

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Correct! And the increase in exports that was being touted at the new dawn will be more difficult to maintain if the £ maintains its upswing.

Very true, which means we have two policies on the go, keep HPI afloat so the UK doesn't sink into the abyss and try keep the pound low to somehow fumble together an export led recovery.

Meanwhile the value (buying power) of money (Sterling) is being eaten away by inflation, a low pound and high house prices.

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Very true, which means we have two policies on the go, keep HPI afloat so the UK doesn't sink into the abyss and try keep the pound low to somehow fumble together an export led recovery.

Meanwhile the value (buying power) of money (Sterling) is being eaten away by inflation, a low pound and high house prices.

Well, I'd go as far as to say that when the housing market looks it's darkest, the pound will sell off. That'll prevent further nominal falls for a while - but of course, real falls will be huge.

I can see this happening again too. Another sterling bounce in 2012 but not so high - then a housing market sell off and another sterling fall. We'll get to a HPC of 35% off in nominal terms eventually.

Edited by AvidFan
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