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jaseywasey

Beginning Of The Sterling Crisis......

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Just holding above 1.48, a drop to 1.46 would see a new 6-year low against USD

With the current account deficit running at 5.1%, and news out today that the budget shortfall has worsened again, not to mention the "joker in the pack" being the Brexit vote, I can see the pound only moving one way.....and it ain't up

Maybe this will be Cameron's solution to getting net immigration back to the "tens of thousands".....by making our currency so worthless, no one in the right-mind would want to come here!

Collapsing pound of course would make London cheaper for overseas purchasers, however, they may be put off due to falling prices and the risk of a currency loss.

Any significant devaluation in Sterling may mean the BOE will have to start raising rates, especially as the Fed has already begun the tightening cycle

Edited by jaseywasey

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Dollar will get stronger as the US is (still) the shiniest turd in the room. But the pound has strengthened, like most western currencies, against the developing worlds currencies, and the Eurozone still has endemic structural problems.

I think the story here is more the dollar than anything else.

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Dollar will get stronger as the US is (still) the shiniest turd in the room. But the pound has strengthened, like most western currencies, against the developing worlds currencies, and the Eurozone still has endemic structural problems.

I think the story here is more the dollar than anything else.

Yep, the USD is the interesting thing. Will it get stronger, for the reasons you mention, in 2016 resulting in oil and commodities falling further?

Or will the reverse happen - USD tops and falls allowing oil, gold/silver and base mentals, soft commodities to turn around?

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We can but hope

Unfortunately if you have savings in sterling waiting for the HPC you get shafted. (again).

A 50% drop in the pound is still a 50% house price crash but you need foreign currency to bennifit.

I have always thought this is the easy option for the government. Most of the people won't see the losses.

Only those with large cash holdings.

That would very similar to the 1970's inflation. Unlike the 70's when we were the sick man of Europe.

Now just about everyone is on their knees. Everyone else needs to suddenly recover leaving us as the odd man out?

For their to be a crisis in sterling? What we have is a non US dollar crisis.

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I personally don't believe I will be competing for a house vs a US citizen or other dollar-holder, in my area.

And there's already been the flood of money into UK property when dollar was higher. How do those owners now feel with their sterling houses worth less vs dollars, and possible prospect of further weakness? Maybe they should be looking to sell and cash back out.

Just to say I'm not sat on cash-out-of-the-system (other than small amount in £ and $).

After bubble-on-bubble, my savings in the financial system (including savings accounts/ISA), in trust banks can better handle a HPC now, with a shock bonfire-of-the-boomers/btlers (wealth) to come.

Did recently glance at how to exchange dollars back to sterling; place I bought them from doesn't offer that service at their UK online site. Main bank exchange rates are rubbish. Don't like the look of some other web-services. Guess I'll find a way around it, when the time comes.. maybe at a place at the airport.

Most of the support to date has been to bail out the banks, nothing more.

Sure, they'll pull some rabbits out of the hat but I can't see anything they do have any effect other than to add a little bit of traction as prices come tumbling down.

That's assuming of course they even want prices to stay high, when there's every chance that they would prefer them to fall.

there's a very good reason they would 'let' prices fall. I've got to agree with Venger, they surely want higher volumes of lending to a whole new generation of debt slaves which will require prices to come down.

Edited by Venger

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Any significant devaluation in Sterling may mean the BOE will have to start raising rates, especially as the Fed has already begun the tightening cycle

I don't think you need to qualify the statement with the word 'may'. All that guff about the BOE not raising rates in the near future can be ignored if the Fed does not reverse its recent tightening. My expectation is that it will be announced just as soon as the May 2016 UK local government elections are out of the way. As others have pointed out low rates were designed to allow the banks and financial institutions to recapitalize not to protect UK borrowers. Edited by stormymonday_2011

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If the BoE has to choose between raising rates to protect the £ or letting it sink, it is obvious what they will select.

If the Fed data continue with same pace, then expect second rise of Fed rate in the next months. It would be interesting to see how low the £ will sink. Can the Fed continue raising rates? If yes, then expect BoE to have to respond at some point in time.

The oil deflation is probably going out of the CPI calculations in the next monts? And dont forget the oil is low because SA is trying to stop the US fracking. When that is stopped , then the price will start rising in 1-2 yrs.

It is all about US economy keep bringing good numbers. If they do and Fed holds its course, then even the useless CPI will start to increase.

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If the BoE has to choose between raising rates to protect the £ or letting it sink, it is obvious what they will select.

If the Fed data continue with same pace, then expect second rise of Fed rate in the next months. It would be interesting to see how low the £ will sink. Can the Fed continue raising rates? If yes, then expect BoE to have to respond at some point in time.

The oil deflation is probably going out of the CPI calculations in the next monts? And dont forget the oil is low because SA is trying to stop the US fracking. When that is stopped , then the price will start rising in 1-2 yrs.

It is all about US economy keep bringing good numbers. If they do and Fed holds its course, then even the useless CPI will start to increase.

Nothing is obvious any more.

Ask me 6 momnths ago would the FED raise rates, I'd say no definitely not.

Ask me 6 momnths ago would Osborne try and restrict BTLers, I'd say definitely not.

Interesting times, nothing is certain right now

Imagine this, sterling is hammer and prices shoot up.....1M people at food banks becomes 2M. More anger. More desperation. More immigrants.

Suddenly the UK is looking like a very very unstable place to me.

The establsihment are masters at self preservation, they must sure contemplate this.

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Nothing is obvious any more.

Ask me 6 momnths ago would the FED raise rates, I'd say no definitely not.

Ask me 6 momnths ago would Osborne try and restrict BTLers, I'd say definitely not.

Interesting times, nothing is certain right now

Imagine this, sterling is hammer and prices shoot up.....1M people at food banks becomes 2M. More anger. More desperation. More immigrants.

Suddenly the UK is looking like a very very unstable place to me.

The establsihment are masters at self preservation, they must sure contemplate this.

Not that Osborne or the Fed had much choice in the matter. Osborne's had to reverse direction because his insane subsidies have essentially destroyed the housing market for everybody except speculators. And Yellen's had to put up rates to keep the bond markets quiescent, disturbed as they have been by the prospect of private sector credit galloping along at 6-7% of GDP. Since neither economy is on a sustainable debt trajectory, crisis is surely looming for them both.

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Unfortunately if you have savings in sterling waiting for the HPC you get shafted. (again).

A 50% drop in the pound is still a 50% house price crash but you need foreign currency to bennifit.

I have always thought this is the easy option for the government. Most of the people won't see the losses.

Only those with large cash holdings.

That would very similar to the 1970's inflation. Unlike the 70's when we were the sick man of Europe.

Now just about everyone is on their knees. Everyone else needs to suddenly recover leaving us as the odd man out?

For their to be a crisis in sterling? What we have is a non US dollar crisis.

I've not been shafted. My savings have kept up with inflation, more than 75% of the countries housing stock has. They are currently out performing inflation by some way.

Life is a long game.

But, to be brutally frank, I'd still rather loose 50% of my savings than give it to some bank/estate agent/boomer/BTLer/c**t for a house.

Edited by TheCountOfNowhere

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"Just holding above 1.48, a drop to 1.46 would see a new 6-year low against USD......"

It'll make gold more expensive (for us!)

Edited by anonguest

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"Just holding above 1.48, a drop to 1.46 would see a new 6-year low against USD......"

It'll make gold more expensive (for us!)

Or if you hold gold...it'll make money cheaper for some

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Logically (!!!) Sterling should be toast - highest twin deficits in developed world.

Certainly, charts suggest strengthening of Yen and Euro v Pound, quite short term.

Long term weakening v US$.

So, fundamentally and technically Pound should be toast. But these things - clearly - take time.

Personally, holding large Pound cash long term is imprudent.

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I don't think you need to qualify the statement with the word 'may'. All that guff about the BOE not raising rates in the near future can be ignored if the Fed does not reverse its recent tightening. My expectation is that it will be announced just as soon as the May 2016 UK local government elections are out of the way. As others have pointed out low rates were designed to allow the banks and financial institutions to recapitalize not to protect UK borrowers.

A most pertinent point.

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Not that Osborne or the Fed had much choice in the matter. Osborne's had to reverse direction because his insane subsidies have essentially destroyed the housing market for everybody except speculators. And Yellen's had to put up rates to keep the bond markets quiescent, disturbed as they have been by the prospect of private sector credit galloping along at 6-7% of GDP. Since neither economy is on a sustainable debt trajectory, crisis is surely looming for them both.

To be fair though,it's not been on a stable trajectory for 15 years which just goes to show that instability can be incredibly stable for a considerable period of time.

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Logically (!!!) Sterling should be toast - highest twin deficits in developed world.

Certainly, charts suggest strengthening of Yen and Euro v Pound, quite short term.

Long term weakening v US$.

So, fundamentally and technically Pound should be toast. But these things - clearly - take time.

Personally, holding large Pound cash long term is imprudent.

Logic exited stage left in about 2002 when wage growth was 6% and house price growth was 25%

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Curse of the main forum thread means sterling looks set to rally in the new year then.

If someone asks for it to be pinned then its nailed on.

I miss Lndnbllxman and his insistence in 2009 sterling would fall below parity with Euro. hes been very quiet last 5 years. Also Jim (always wrong) Rogers. What happened to him!

Edited by R K

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Also Jim (always wrong) Rogers. What happened to him!

Quite patently not 'always wrong', as he is currently enjoying his hundreds of millions in Singapore.

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Logically (!!!) Sterling should be toast - highest twin deficits in developed world.

Certainly, charts suggest strengthening of Yen and Euro v Pound, quite short term.

Long term weakening v US$.

So, fundamentally and technically Pound should be toast. But these things - clearly - take time.

Personally, holding large Pound cash long term is imprudent.

I can't find it but I did a thread in 2007 about currency and then resurrected it a few years later to see what happened.

Those who chose to move their £ into other currencies post 2007 would be a nice split between ******ed and ******ing ya dancer.

It's a lottery. Literally

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Curse of the main forum thread means sterling looks set to rally in the new year then.

If someone asks for it to be pinned then its nailed on.

I miss Lndnbllxman and his insistence in 2009 sterling would fall below parity with Euro. hes been very quiet last 5 years. Also Jim (always wrong) Rogers. What happened to him!

We shall see,

Foreign investors in UK property will be hoping you are right otherwise they could be sitting on substantial dollar denominated losses

Sterling USD is still above the April 2015 lows but is down over 20 cents since July 2014 which might explain some of the weakness in the central London property market. The cost of owning that prime real estate is growing particularly as it is much more illiquid than US Treasuries

Edited by stormymonday_2011

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