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Realistbear

Sterling Hits 7 Month Low Vs. Euro

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http://today.reuters.co.uk/investing/finan...RLING-CLOSE.XML

Sterling near 7-month low vs euro, focus on rates

Mon Mar 20, 2006 3:31 PM GMT

LONDON, March 20 (Reuters) - Sterling stayed near last week's seven-month low versus the euro on Monday, subdued by the prospects for steady UK interest rates or even a cut contrasted with growing expectations for more hikes in the euro zone.
Markets shrugged off mixed data on the UK housing market, showing that asking prices for houses rose at a faster pace, whilst underlying mortgage lending growth continued to ease.
*
If house price inflation does pick up, the Bank of England could be less likely to cut rates from the current 4.5 percent for fear of further stoking inflation in the UK property market. A Reuters poll published on Monday showed economists are becoming less certain that the next move in UK rates will be down, although half the participants still expected a cut by end-September.
Most of the others expected it the BoE leave rates on hold -- a scenario which could still hurt sterling at a time when markets are increasingly factoring in a rise in euro zone rates to 3.25 percent by year-end from 2.50 now and are also expecting at least one more hike from the U.S. Federal Reserve
.

Once the Jap rates filter through (they raised the rates today--see Tokyo-Mitsubishi Bank thread) it is hard to see how the B o E can stand aginst the tide much longer--or perhaps they want to devalue the pound to parity with the Euro and join the club--Tony's dream come true?

*Ignoring Rightmove data? Have they been looking at HPC.co.uk! :lol:

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Don't you mean the Australian dollar is sinking faster than the pound? As is the Canadian dollar, for that matter.

People have been saying for a while that the pound dropping against the US dollar didn't matter as most trade was with Euro countries, so in that case a low against the Euro can't exactly be good for us.

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Sterling's going gangbusters against the Aussie Dollar... so what?

I reckon we could have a bigger trade deficit with Eurozone so this could be quite relevant to inflation.

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Don't you mean the Australian dollar is sinking faster than the pound? As is the Canadian dollar, for that matter.

People have been saying for a while that the pound dropping against the US dollar didn't matter as most trade was with Euro countries, so in that case a low against the Euro can't exactly be good for us.

The Aussie also tends to track the Euro, which makes the current state of play very odd.

Only goes to prove that that we draw a long bow when extrapolating random exchange rate movements to anticipated HPI.

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People have been saying for a while that the pound dropping against the US dollar didn't matter as most trade was with Euro countries, so in that case a low against the Euro can't exactly be good for us.

Of course it's good for us - at least in terms of exports - it is now cheaper for Europeans to buy from us. That should mean an increase in jobs in relevant sectors. What it's not good for is imports or services such as foreign holidays, which would lead to increased inflation.

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What it's not good for is imports or services such as foreign holidays, which would lead to increased inflation.

Duh. We import massively more than we export, and the things we export are often heavily reliant on imported commodities whose prices keep going up as the pound falls.

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Duh. We import massively more than we export, and the things we export are often heavily reliant on imported commodities whose prices keep going up as the pound falls.

Duh yerself - we don't import "massively more" from the EU. The difference is about 10% (ONS) and so a decent currency fluctuation weakening the pound could be very beneficial to the UK economy in the long term.

So what would you rather have - carry on importing "massively more" than we export to the EU or at least try redress the imbalance? Not all UK exports are in manufactured goods by any means. Surely increasing exports and at least making the balance of trade less bad are good for the long term economy?

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Surely increasing exports and at least making the balance of trade less bad are good for the long term economy?

Why would trashing the pound improve the balance of trade, when we hardly make anything anymore? Most things we buy we _have_ to import because they can't be made competitively here even if the pound dropped significantly.

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Why would trashing the pound improve the balance of trade, when we hardly make anything anymore? Most things we buy we _have_ to import because they can't be made competitively here even if the pound dropped significantly.

This IS the problme Gordon has got to face. If he lowers IR imports rise and its hello Mr. inflation. If he raises them its hello HPC. Either way he is buggered.

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Why would trashing the pound improve the balance of trade, when we hardly make anything anymore? Most things we buy we _have_ to import because they can't be made competitively here even if the pound dropped significantly.

I have just told you our trade balance with the EU and yet you still ignore the facts. We only import about 10% more from the EU than we export. Think about that - WE EXPORT A HELL OF A LOT TO THE EU. We don't have to make things to export things - financial services, intellectual property, consultancy. Yes, manufacturing is a big part, but not the only part. Cliched "we don't make anything any more" comments are a long way from the truth and hence I just can't see why you think a weakening pound AGAINST THE EURO is bad. This thread is not about the renminbi or dollar or yen, it's about the euro.

Some stats here: ONS EU trade stats

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  • 302 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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