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EvilEdna

Why Is The Pound Up Today?

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A day after announcing further QE more quickly and at greater levels than the market had anticipated why is the pound pretty much the world's best performing currency this morning?

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A day after announcing further QE more quickly and at greater levels than the market had anticipated why is the pound pretty much the world's best performing currency this morning?

Must be one of the paradoxes of economics. I am struggling with George Osbourne's interview on Radio 4 just now. When tackled about the dangers of QE for the already above target inflation figure, he played it down, more or less suggesting that inflation resulting from high oil prices or devaluation did not count. His explanation was accepted!

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The pound sunk rapidly yesterday when QE was announced but didn't fall much. Today it seems to have recouped pretty much all yesterday's losses. I guess there's just no logic to day to day currency movements but there ought to be surely as most of it is speculative. If I was a currency speculator I'd've sold my pounds in anticipation of a greater supply of pounds and their resultant decrease in value. I feel like I must be missing something blindingly obvious.

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1. Because the markets had priced the QE in already.

2. Because the currencies against which the pound is being compared represent economies that are just as sodomised as ours, if not more so.

Your right that for the past couple of months it's been obvious that this was imminent and you'd expect a lot of it to be priced in, however, when it came it was sooner than expected and on a greater scale and immediately following the announcement the pound plummeted. Granted we're all going to hell in a handcart but the Fed and ECB seem less QE-inclined than the BofE.

If I remember rightly after the last round of QE the pound depreciated significantly but over a period of a couple of years. Surely speculators would look to anticipate such movements?

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Because the pound was too undervalued

Possibly true. Don't forget just four years ago we had the pound at $2 and euro 1.50. Against the Swiss frank it has all but halved, and almost exactly shadowed the devaluation of the mark against the swiss frank 1914-1918.

Fears of hyper-inflation is, however, meaning the pound is at a big discount from reality. At the moment our retail prices are hugely less than in Europe on an exchange rate basis, just as prices were in Germany 1918-1923.

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Possibly true. Don't forget just four years ago we had the pound at $2 and euro 1.50. Against the Swiss frank it has all but halved, and almost exactly shadowed the devaluation of the mark against the swiss frank 1914-1918.

Fears of hyper-inflation is, however, meaning the pound is at a big discount from reality. At the moment our retail prices are hugely less than in Europe on an exchange rate basis, just as prices were in Germany 1918-1923.

It's halved against the Yen over that period too. Which is odd, given that Japan's debt problems make ours look enviable...

Edited by rantnrave

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Possibly true. Don't forget just four years ago we had the pound at $2 and euro 1.50. Against the Swiss frank it has all but halved, and almost exactly shadowed the devaluation of the mark against the swiss frank 1914-1918.

Is there any significance in this seemingly pure coincidence? Or is this what Vince meant by economic war? (Charles Moore has also noted that this crisis has now run as long as WWI.)

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Granted we're all going to hell in a handcart but the Fed and ECB seem less QE-inclined than the BofE.

Eh? The Fed has already COMPLETED it's QE2 - we've only just annonunced the start of ours. They are ahead in the QE game.

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If I remember rightly after the last round of QE the pound depreciated significantly but over a period of a couple of years. Surely speculators would look to anticipate such movements?

Against what?

Versus $ and € sterling has appreciated since QE started in March 2009.

5 year charts here.

http://uk.reuters.com/business/currencies

CAD and AUD it is down but lots of that was before QE.

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Interesting considering the QE.

GBP/USD had pretty much retraced all off the fall after the QE announcement yesterday by London open this morning, then at 7.30am someone big was buying and it spiked another 100 pips at that point.

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A day after announcing further QE more quickly and at greater levels than the market had anticipated why is the pound pretty much the world's best performing currency this morning?

It is the realisation that yesterday's BOE move was inconsequential. Yesterday's £ move was a knee jerk reaction (the QE was not anticipated).

To be fair, it's best to wait a few days for confirmation, 2 days is too short. You also have to take into account other currency moves, dollar down and euro up have been the trend for the last couple of days irrespective of what the pound did.

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Eh? The Fed has already COMPLETED it's QE2 - we've only just annonunced the start of ours. They are ahead in the QE game.

I'm not sure whether our QE represents a greater extension of the volume of our currency than the Americans but be that as it may I'd've thought that the QE that the Americans have completed wouldn't affect the exchange rate now. What I was meaning was that the Fed seems reluctant to introduce further QE - though of course that can change.

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A day after announcing further QE more quickly and at greater levels than the market had anticipated why is the pound pretty much the world's best performing currency this morning?

Optomists would say that accomodative action would encourage growth which hopefully would mean that our economy will be on the road to recovery. In the long term this would obviously be good. The fact that we are taking action in a more aggressive and preemptive manner could be better in comparison than other nations. Which is what we are valuing our currency against.

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Tearing up now, over 1.56 and climbing.

What a turd race :lol:

It's being dragged along/up by the Euro. Looking at GBP/USD on its own isn't too useful most of the time considering it is dominated by the movement in EUR/USD.

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  • 284 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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