The £ Is Dropping

[Killer Bunny]

Or this

In other words it's bottoming here.

If it breaks below sustainably then it is entirely toast. Parity?

[deckchair_on_the_moon]

GBP is indeed looking weak.

However, you might be surprised how long the BoE can keep rates low before having to raise due to the weak currency.

It's all about comparative advantage in the currency markets and ultimately there are other exchange rates to consider beyond just GBP/USD. For example the Euro is now in terminal decline and pretty much every major currency will do well against the Euro in the medium to long term.

Unfortunately there is a chance that the base rate in the UK could actually go negative in the short to medium term before it bottoms, reverses and begins its inevitable climb upwards. One of the BoE's senior guys Andrew Haldane has already floated the idea in public, just to see how people would react. For him however, the real aim is abolishing cash. This would certainly enable the BoE to go to negative rates, at least for a short time. The government would absolutely love a cashless society because it would enable them to track down every last penny in taxes.

http://www.telegraph.co.uk/finance/bank-of-england/11874061/Negative-interest-rates-could-be-necessary-to-protect-UK-economy-says-Bank-of-England-chief-economist.html

So while I agree that interest rates are (eventually) going up, don't be surprised if we get a period of slightly lower or even negative rates. You know, just to inflate the housing bubble just a little bit more before a slow, steady decline for the next 15 years.

[Killer Bunny]

So while I agree that interest rates are (eventually) going up, don't be surprised if we get a period of slightly lower or even negative rates. You know, just to inflate the housing bubble just a little bit more before a slow, steady decline for the next 15 years.

[The12YearWait]

GBP is indeed looking weak.

However, you might be surprised how long the BoE can keep rates low before having to raise due to the weak currency.

It's all about comparative advantage in the currency markets and ultimately there are other exchange rates to consider beyond just GBP/USD. For example the Euro is now in terminal decline and pretty much every major currency will do well against the Euro in the medium to long term.

Unfortunately there is a chance that the base rate in the UK could actually go negative in the short to medium term before it bottoms, reverses and begins its inevitable climb upwards. One of the BoE's senior guys Andrew Haldane has already floated the idea in public, just to see how people would react. For him however, the real aim is abolishing cash. This would certainly enable the BoE to go to negative rates, at least for a short time. The government would absolutely love a cashless society because it would enable them to track down every last penny in taxes.

http://www.telegraph.co.uk/finance/bank-of-england/11874061/Negative-interest-rates-could-be-necessary-to-protect-UK-economy-says-Bank-of-England-chief-economist.html

So while I agree that interest rates are (eventually) going up, don't be surprised if we get a period of slightly lower or even negative rates. You know, just to inflate the housing bubble just a little bit more before a slow, steady decline for the next 15 years.

If they BoE got rid of pound notes in cash next week people would use a foreign currency as a way of paying.

I can't quite see any African, Asian nation (except Japan) with the ability to do thus in my lifetime making such plans utterly pointless.

[deckchair_on_the_moon]

If they BoE got rid of pound notes in cash next week people would use a foreign currency as a way of paying.

I can't quite see any African, Asian nation (except Japan) with the ability to do thus in my lifetime making such plans utterly pointless.

I agree that a move to a cashless society would create an underground economy in other currencies, some legit others not. But you still need a bank account to pay at least some of your bills right? And actually increasingly there are things you can't even pay for with cash now, e.g. London Underground. So I do agree that unless the entire planet moved to a cashless paradigm, abolishing just sterling cash would not work 100% to its theoretical aims. However, if the government can get even 10% more tax by doing this sort of anti-freedom crazy notion, trust me, it will try it. Why? Because it's up to its eyeballs in debt and is desperate for revenue.

[The12YearWait]

I agree that a move to a cashless society would create an underground economy in other currencies, some legit others not. But you still need a bank account to pay at least some of your bills right? And actually increasingly there are things you can't even pay for with cash now, e.g. London Underground. So I do agree that unless the entire planet moved to a cashless paradigm, abolishing just sterling cash would not work 100% to its theoretical aims. However, if the government can get even 10% more tax by doing this sort of anti-freedom crazy notion, trust me, it will try it. Why? Because it's up to its eyeballs in debt and is desperate for revenue.

Not desperate enough to starting taxing the corporations or the 1%ers.

Edited February 26, 2016 by The12YearWait

[deckchair_on_the_moon]

Not desperate enough to starting taxing the corporations or the 1%ers.

Be patient. The hunt for taxes is happening on a global scale. The IMF is talking it up. The Swiss are in the process of destroying their reputation for bank secrecy in order to placate the tax authorities of the G7 nations. The BoE is talking about negative rates. The US is talking about negative rates. The ECB is talking about negative rates. Japan and Denmark have already gone negative. In Sweden, money transactions are increasingly going completely digital. Watch the trend unravelling.

Here are just some of the sources to back up my claims:

Saudi Arabia ups taxes after recommendation from IMF: http://gulfnews.com/news/uae/government/uae-to-implement-5-per-cent-vat-from-january-2018-1.1678703

Swiss move away from bank secrecy: http://www.out-law.com/en/articles/2015/may/swiss-bank-secrecy-to-come-to-an-end-with-eu-agreement/

BoE talking about negative rates: http://www.telegraph.co.uk/finance/bank-of-england/11874061/Negative-interest-rates-could-be-necessary-to-protect-UK-economy-says-Bank-of-England-chief-economist.html

US talking about negative rates: http://www.marketwatch.com/story/bernanke-says-fed-likely-to-add-negative-rates-to-recession-fighting-toolkit-2015-12-15

ECB talking about negative rates: http://www.ft.com/cms/s/0/8940e78c-8de3-11e5-a549-b89a1dfede9b.html#axzz41JNY3lKf

Japan already committed to negative rates: http://www.bloomberg.com/news/articles/2016-01-29/yen-tumbles-more-than-2-as-boj-adopts-negative-interest-rates

Denmark and negative rates: http://www.bloomberg.com/news/articles/2015-02-11/fx-speculators-seen-driving-denmark-to-test-world-s-lowest-rate

Negative rates and cashless societies: http://www.computerweekly.com/news/4500271520/Could-Sweden-become-the-first-cashless-society

[MrPin]

It's still cheaper to buy stuff from the USA, have it shipped, and pay the import duty!

[council dweller]

Thanks for your list deckchair.....

My Japanese Yen should be safe ?

Currently getting about 0.1%....got to be happy with that!

,

They seem to be hitting new accounts ?

Btw, I spent a year and a half in Zimbabwe playing the Forex markets (25 years ago)

Didn't work, just played the market. There`s a hint for GO.....create a whole new business ....

[deckchair_on_the_moon]

Thanks for your list deckchair.....

My Japanese Yen should be safe ?

Currently getting about 0.1%....got to be happy with that!

,

They seem to be hitting new accounts ?

Btw, I spent a year and a half in Zimbabwe playing the Forex markets (25 years ago)

Didn't work, just played the market. There`s a hint for GO.....create a whole new business ....

Thanks for your insights.

Yeah your Yen should be safe for a while. BoJ is really only targeting the banks buying government debt.... at the moment at least anyway.

You must have had quite an experience in Zimbabwe. I've still got a legit 100 Trillion Dollar note in my wallet from Zimbabwe. I think by the end of the hyperinflation "experiment" this note would buy a loaf of bread.

Please don't tempt GO LOL, he might seriously consider it! I'm only joking of course, all the hyperinflation events throughout history have always followed some kind of revolutionary event / movement. That's not to say that there will never be another revolution in the UK of course, but rather just to say that hyperinflation certainly isn't on the cards in the foreseeable future.

[council dweller]

Well, inflation officially was just 20% when I was there (92/93) A loaf of government controlled price bread was about 7 or 8p (50cents). Not so bad for the poor. Things take time....

What it taught me about money is that it can be here today and gone tomorrow. Don`t take it seriously !

Edited February 28, 2016 by council dweller

[Killer Bunny]

Breaking finance news!!!

£ rising due to Brexit.

Idea that £ was falling due to Brexit was nonsense.

Brexit will do nothing to £ nor shares or property or Bonds.

[council dweller]

lol!

[R K]

FT Markets ‏@FTMarkets

Sterling hits highest level of the year http://on.ft.com/28QQ0XB

[Guest BillyNI]

Got a message from Transferwize to not attempt to transfer money today or tomorrow as they can not guarantee rates.

With no exit polls I don't expect a downside today.

[spyguy]

Problem is, when the EU vote is over, one way or another, people will start having a closer look atthe UK finances, which are terrible - 5% budget deficit (whose reduction of appears to have stalled) and 7% current account deficit.

[thecrashingisles]

FT Markets ‏@FTMarkets

Sterling hits highest level of the year http://on.ft.com/28QQ0XB

The markets think Remain has it. The final polls all look good for Remain.

[Sour Mash]

Problem is, when the EU vote is over, one way or another, people will start having a closer look atthe UK finances, which are terrible - 5% budget deficit (whose reduction of appears to have stalled) and 7% current account deficit.

I think they would definitely take a good hard look in the event of a Brexit but if the status quo holds, the govt ought to be able to get away with the smoke and mirrors for a little while longer and troubles elsewhere in the EU might even make the UK look 'safe' in comparison.

[Guest BillyNI]

I think they would definitely take a good hard look in the event of a Brexit but if the status quo holds, the govt ought to be able to get away with the smoke and mirrors for a little while longer and troubles elsewhere in the EU might even make the UK look 'safe' in comparison.

What he said.

[shindigger]

Gold seems to think we're remaining.

[canbuywontbuy]

I think they would definitely take a good hard look in the event of a Brexit but if the status quo holds, the govt ought to be able to get away with the smoke and mirrors for a little while longer and troubles elsewhere in the EU might even make the UK look 'safe' in comparison.

If the status quo holds, then we're still chained to the troubles in the EU.

[Errol]

The markets think Remain has it. The final polls all look good for Remain.

There is only one final poll that matters. Wait for the result.

[Killer Bunny]

Buy rumour sell news.

£ is trending down, since 2014 or 2007 as you prefer.

Largest twin deficits in developed world, init.

Could be short term fluctuation - when isn't there?

But global and UK economy determine price, not whether or not UK in a political construct club.

Edited June 23, 2016 by Killer Bunny

[thewig]

Remain already priced in since the Jo Cox production sealed the deal.

[thewig]

Therefore big selloff tomorrow/next week.