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Realistbear

Sterling Roars As Euro, Chf, $ Etc Crumble

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GBP to USD 1.6243 +0.0073

GBP to EUR 1.1908 +0.0019

GBP to JPY 135.3812 +0.6002

GBP to TRY 2.5620 +0.0126

GBP to THB 49.6696 +0.1385

Great news for those crucial private sector jobs that will boost exports and take up the slack from the public sector.

Even the thought of an end to "vigilance" and there is a buying frenzy. ST flight to the moon, MT weakening and LT crash IMO. There is nothing undergirding the pound other than higher IR in the face of a collapsing housing market and mass unemployment.

Edited by Realistbear

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GBP to USD 1.6243 +0.0073

GBP to EUR 1.1908 +0.0019

GBP to JPY 135.3812 +0.6002

GBP to TRY 2.5620 +0.0126

GBP to THB 49.6696 +0.1385

Great news for those crucial private sector jobs that will boost exports and take up the slack from the public sector.

Even the thought of an end to "vigilance" and there is a buying frenzy. ST flight to the moon, MT weakening and LT crash IMO. There is nothing undergirding the pound other than higher IR in the face of a collapsing housing market and mass unemployment.

I told you Nadeem Walayat had backed a truck up to buy sterling on leverage when the -0.5% GDP figure came out.

You are thrashing about in quicksand at the moment with your Yankee dollars.

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I told you Nadeem Walayat had backed a truck up to buy sterling on leverage when the -0.5% GDP figure came out.

You are thrashing about in quicksand at the moment with your Yankee dollars.

Waiting like a vulture to pick at the carrion after the HPC blows through and takes down everything in its wake.

Sterling and house prices are tied together tighter than you can imagine. HPI is UK Plc.

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Waiting like a vulture to pick at the carrion after the HPC blows through and takes down everything in its wake.

Sterling and house prices are tied together tighter than you can imagine. HPI is UK Plc.

Mr Walayat Esq has forecast sterling to be $1.80 to $1.90 by the middle of the year.

Sterling is trying to dig me an escape tunnel but every time it gets a yard further Mervyn King says something and the roof of the tunnel caves back in.

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I told you Nadeem Walayat had backed a truck up to buy sterling on leverage when the -0.5% GDP figure came out.

You are thrashing about in quicksand at the moment with your Yankee dollars.

I was pretty bullish on the Dollar (against Sterling) until QE-2 set sail. After that I became generally bearing on the Dollar but not particularly bullish on Sterling. My problem with Sterling (over the next few years) is that the UK is still staring down the barrels of a HPC - not good for a country whose main industry is house flipping.

All this talk of interest rate rises as the market too giddy IMHO.

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The pound has been moving up against the dollar steadily. Tis the exchange rate I watch.

Not surprising really, given that they are printing like mad in the US, I think it has stopped here. And I also think that the Hawk's now have the upper hand, and we are going to see some rate rises pretty soon.

Just where that leaves everything else is a bit of a mystery. As you say, higher rates will push up the cost of government borrowing, adding another straw on the camel's back. Banks could go under too, as borrowers may find higher rates unpayable, this time though with no state to bail them out.

It has to be done though. Let the dollar collapse, but lets not race them to the bottom. Now is the time to keep the pound strong and rely on inflation in other countries to keep the UK competitive.

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Mr Walayat Esq has forecast sterling to be $1.80 to $1.90 by the middle of the year.

Sterling is trying to dig me an escape tunnel but every time it gets a yard further Mervyn King says something and the roof of the tunnel caves back in.

You are not the only one. With house prices stubbornly high a half decent exchange rate is the only thing holding me back from leaving these shores. Sorry but paying quarter of a million for a shoebox with a credit card slot between me and the neighbour isn't my idea of a great deal.

By devaluing the £ and keeping house prices sky high Merv as made prisoners out of us all. Fool me once shame on you, fool me twice shame on me. $1.80-1.90 would open up quite a few doors for me, but not if the Dollar tanks along with Sterling rising.

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with the pound at 1.80 1.90, I wonder what the manufacturing figures will be.

Merv is already unhappy with 1.60 and knows that IR hike talk is causing it. The market is buying on the rumour and may sell off on the news. With nothing holding UK Plc up other than a resilient housing market the downside potential is massive.

Mr. Uniacke is in the Sterling bear camp and sees the opposite to that nice Mr. Walayat:

http://uk.finance.yahoo.com/news/Brighter-outlook-sterling-tele-2013787005.html?x=0

Despite ongoing US economic worries and further quantitative easing on the cards for 2011, the dollar’s status as the haven of all safe havens continued, as investors threw away the rulebook and rushed to the greenback.
Glenn Uniacke, senior dealer at Moneycorp says that since the beginning of the crisis, “a ‘bigger is better’ attitude is what we’ve seen. So despite their relatively weakening economies, we’ve seen the dollar, the yen, the euro prosper.”
Mr Uniacke predicts the dollar to be “the best of a bad bunch” in 2011,
ending the year at $1.40 against sterling
compared with $1.54 today, with much of its strength seen during the first half.

I can see £ rising considerably more in the ST as the threat of IR hikes grows and this may prompt intervention by Merv to talk the £ down again. His worst nightmare is a crippling blow to our only chance of survival--higher exports. All the time the plates are spinning (people spending in the high street and no jobs being lost) QE2 will not be necessary. But if we go into recession or see sharp drops in GDP over a sustained period £ is toast. So far, GDP is only dropping by small increments that are weather related--or so they say.

Edited by Realistbear

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I can see £ rising considerably more in the ST as the threat of IR hikes grows and this may prompt intervention by Merv to talk the £ down again. His worst nightmare is a crippling blow to our only chance of survival-- higher exports foreigners buying our houses due to sterling devaluation. All the time the plates are spinning (people spending in the high street and no jobs being lost) QE2 will not be necessary. But if we go into recession or see sharp drops in GDP over a sustained period £ is toast. So far, GDP is only dropping by small increments that are weather related--or so they say.

Corrected for you.

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I may resurrect my poll on currency I did a few years ago. When the £ was at about 1.05 to the € and everyone was screaming 'Get out !!'.

Not saying there is any right or wrong and I have no idea what will happen in the future. However many people who jumped ship back then will have lost out to the exchange rate and lost out on interest. (As whilst the rates here are pants you can get 3-4% tax free and you will not be getting that in other currencies)

* Unless you have a resident a/c in the country but that is a different kettle of fish.

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Corrected for you.

Might the Russians be tempted to sell if the pound really goes back to 1.90 ?

Assuming they bought in 2008/2009 they stand to make a killing in $ terms

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Might the Russians be tempted to sell if the pound really goes back to 1.90 ?

Assuming they bought in 2008/2009 they stand to make a killing in $ terms

The UK is a semi-criminal money-laundering economy - who else would look after all the Russian gangsters and their ill-gotten gains as nicely?

They have recently removed any immigration caps from rich people. If you have a massive amount of money you will be able to do anything in the UK. This is what happens when all your politicians care about, is making as much money as they can.

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Could it be that the market is usually happy with base rate rises, as it is illustrating that the economy (read: credit fuelled investment) is growing too quickly needs cooling? Perhaps the market is realising that a rate rise now would signal nothing of the sort, but rather a desperate/foolish attempt to constrain commodity inflation at the expense of killing off a few more struggling companies (not good for Sterling either).

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Nothing to see as always RB.

GBP down 0.05% as we speak, finished up a bit yesterday +0.18% but was down -0.8% 2 days ago.

Would have been more credible to quote "GBP crumbles / -0.8%" two days ago than "GBP soars +0.0%" today...

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Nothing to see as always RB.

GBP down 0.05% as we speak, finished up a bit yesterday +0.18% but was down -0.8% 2 days ago.

Would have been more credible to quote "GBP crumbles / -0.8%" two days ago than "GBP soars +0.0%" today...

He is obsessing about his Yankee dollars. Any slight increase in sterling and he feels a pain as if The Bernanke is sticking pins in a Realistbear voodoo doll.

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He is obsessing about his Yankee dollars. Any slight increase in sterling and he feels a pain as if The Bernanke is sticking pins in a Realistbear voodoo doll.

When you are dealing in vast sums a 1 cent shift is big munee!

I have no doubt that we are going to face economic hell once the housing bubble breaks and reposessions start building. We will follow the US as we have done the exact same thing and built an economy on LIAR LOANS. The only difference is that they are ahead of us by at least three years now as our VIs have been doing all in their power to keep house prices up.

Sterling is rising on a very negative fundamental: inflation. And rising sterling is very BAD for the economy and will have repercussions later on.

As our friend Kathie at FOREX says:

http://uk.finance.yahoo.com/news/Should-UK-really-hike-rates-yahoofinanceuk-3210082681.html?x=0

Should the UK really hike rates before Europe and the US?
Kathleen "Kathie" Brooks, Director of Research UK, Forex.com, 14:41, Friday 18 February 2011
One of the main themes in forex markets for 2011 was the ugly contest between the euro, the pound and the dollar.
So far the pound is losing that contest (who would want to win it).
Sterling has appreciated more than 3.3% on a broad-based basis, while the euro is up just over 3% and the dollar is down 1.5%.
The chief driver of sterling this year has been the prospect of interest rate hikes by the Bank of England.
The market is expecting the Bank to tighten policy based solely on elevated levels of inflation, which is currently running at a 4% annualised rate.
Based on the Short-Sterling market (which is used to bet on the direction of interest rates in the UK) the Bank will hike at least twice by the end of the year.
In contrast, the European Central Bank is expected to hike less than twice this year and the Federal Reserve in the US is barely expected to raise rates at all in 2011. However, is the market right in assuming that the BoE will be the first to bite the bullet and put up borrowing costs?
Bank forecasts pave way for rate rises
Will rates really rise?
There is growing evidence that the
economic recovery in the UK is too fragile to deal with a rate hike in the near future
. The labour market is showing signs of stress even before public sector jobs cuts have taken hold in a meaningful way.
The number of people claiming
jobless benefits rose
in January and consumer confidence has nose-dived. The Bank of England also revised down its growth profile in its latest Inflation Report. Its central scenario is that growth could come in below 2% this year and there is as slight chance that we could dip back into recession.
While it is true that inflation can't keep rising at a 4% clip, the
pressures on inflation are largely temporary
, including a hike in the sales tax at the start of this year, rising commodity prices and a drop in the value of the pound in 2008-2009.
Since inflation is essentially a rate of change, as long as taxes don't continue to move higher every year and energy prices don't rise at the 30% annualised rate they did in 2010 then prices should fall back to the Bank's 2% target by next year.
Thus, a rate hike when the growth outlook is shaky at best and inflation could fall naturally in the coming months, may be asking for too much from the Bank of England.
It's also worth noting that Andrew Sentance, the arch hawk at the Bank who has long called for a rate hike, is leaving the rate-setting committee in May. We don't yet know who his replacement will be, but if they don't share the same view as Sentance then the committee will have lost its most hawkish element.
Without a leader, the faction at the Bank of England who wants rates to rise may find it harder to persuade other members who are still sitting on the fence.
European prospects
So what about the European Central Bank? That all depends on how the EU authorities deal with the sovereign debt crisis over the coming months. To achieve this they must fundamentally alter the eurozone's structure that would include the transfer of funds from financially strong to weak states in trouble, essentially laying the path for fiscal union.
If they can do this then the ECB could raise rates. Arguably, as long as Spain doesn't need a bailout, rates should rise in the currency bloc. Germany's growth rate is running at its fastest pace since reunification and if it continues to do so then eventually it will feed through to wage inflation.
The ECB traditionally stamps out the first sign of inflationary pressure (in contrast to the UK, where traditionally inflation is higher than it is in Europe). Thus, the coming weeks will be crucial for interest rate expectations in the eurozone as the authorities in Brussels try to hash out a credible long-term solution to the crisis afflicting the peripheral economies.
Across the Pond
And finally
the Federal Reserve. It has been worried about deflation
and extended levels of unemployment for the past year. However, after a second round of quantitative easing in November and then a fiscal stimulus from the government at the end of 2010 the US's economy is looking in good shape.
In contrast to the UK, the
Fed raised their expectations for the growth rate this year to 3.9%
. That is surely more inflationary than a meagre 2% at best for the UK?
Even deflation fears in the US are misleading. The Federal Reserve looks at core inflation, which fell to below 1% in 2010. However, that doesn't take account of rising food and energy prices, which the ECB and Bank of England look at.
In the UK core inflation pressures are the same as they are in the US, so why is the market pricing in a more hawkish trajectory for the BoE than the Fed?
Overall, at this moment no one can say with much certainty which of the major central banks will hike rates first. So those expecting the Bank of England to pull the trigger first might be sorely disappointed
.
The only thing we know for sure is that volatility in foreign exchange markets will increase as investors re-price interest rate expectations.

+1.25 (extra .25 added as inflation adjustment).

Edited by Realistbear

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I was pretty bullish on the Dollar (against Sterling) until QE-2 set sail. After that I became generally bearing on the Dollar but not particularly bullish on Sterling. My problem with Sterling (over the next few years) is that the UK is still staring down the barrels of a HPC - not good for a country whose main industry is house flipping.

All this talk of interest rate rises as the market too giddy IMHO.

Interest rate hikes tend to support a currency. But the $ is subject to same inflation possible hike pressure. The fact is that the USA has had most of its property crash. We have staved it off and supported our property prices at huge expense and for no good reason.

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This is what happens when all your politicians care about, is making as much money as they can.

Always has been and always will be. Anyone who ever gets into any position of power abuses it.

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Guest spp

He is obsessing about his Yankee dollars. Any slight increase in sterling and he feels a pain as if The Bernanke is sticking pins in a Realistbear voodoo doll.

$$$$$$ :lol:

edit :£££££ :lol:

Edited by spp

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I may resurrect my poll on currency I did a few years ago. When the £ was at about 1.05 to the € and everyone was screaming 'Get out !!'.

Indeed, we are dealing with forces we cant even begin to comprehend.

When it happens though, it will happen instantly.

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I predict that £terling will be $1.70 and €1.24 in June 2011.

I predict this because we all know interest rates are at their lowest ever level and inflation is getting silly. Sooner or later the Bank of England is going to nudge up rates and that will increase the value of sterling.

Ideally the bank will do this slow as not to kill off the laughingly called recovery, but they wont expect by Feb 2012 that rates will be around 3%.

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  • 312 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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