Jump to content
House Price Crash Forum
FrozenOut

Pound Getting A Battering!

Recommended Posts

See here

I think you can draw something from the data when the pound is down against virtually every other currency.

Daily margins aren't that important as they can take days/weeks to move. Last year it took 11 weeks to fall from $1.95 to $1.75 which equates to about 1% per week. Sterling then recovered to $1.84 over the following 8 weeks or 0.64% per week. Currency exchanges move slowly and in predicable directions.

It does look like the world is begining to sell Sterling and buy Euros and Dollars.

Bit of a slant on the statistics you're using here. $1.94 was about the furthest reach of the £/$ rate (I remember at the time the weakness of the dollar led many to predict it was going to fall to about $2.20 or so, which would have been a different problem). Prior to that it was in the $1.70-1.75 region, a year or so before that it was down in the $1.40s. That makes the figures you are quoting sound a bit more dramatic than they really are, I think...

I just took 01/01/05 to 31/12/05, hence over 2005.

But yea I see your point, statistics are clear as mud.

Share this post


Link to post
Share on other sites

very dodgy CIA figures you quote there. Add up the total of EU component nation exports for 2005 and compare them to overall EU exports for 2004.

Suppose these are the same people who give Bush his intelligence :lol:

I would ignore the EU stats

Share this post


Link to post
Share on other sites

I'd hardly call under 0.5% falls a battering.

Simon, don't taunt the bears, they don't like it ............. !

We have been promised a meltdown in the £ as soon as the Yanks go to 4.75% IRs and above. Well lets just wait and see should we. Now, its happened, the currency dealers will be throwing their £s down the toilet won't they - this is what we have been promised by the likes of Realistbear

And what is a meltdown may we ask - a 5% or 10% fall ? and over what time period.

From what I've been reading on this forum, I am expecting 10% falls by the end of April at least. So go on bears define whats going to happen ?!

:ph34r:

Share this post


Link to post
Share on other sites

I saw this thread and thought...

"Sterling is under going revaluation"

and not...

"Sterling is worthless. I will swap my pile of chopped wood for paper money so I can keep warm tonight by burning notes"

The point is when currency takes a battering it takes days/weeks/months, not hours (usually).

I think the original poster meant

1). Sterling is taking a battering.

2). Today it slips against all other major currencies.

and not...

SHOCK HORROR! ROLL UP! ROLL UP!

STERLING IS WORTHLESS...

ALL OUR OIL AND GAS IMPORTS HAVE BEEN DIVERTED TO SPAIN AND AMERICA...

POWER GENERATION TO BE SWITCHED OFF AT 9PM TONIGHT...

PETROL FOR EMERGENCY SERVICES ONLY...

ROYAL FAMILY TO EMIGRATE...

ETC ETC

This thread just doesn't look that sensationalist to me. Maybe it's just me?

Edited by ?...!

Share this post


Link to post
Share on other sites

Premature ejaculation is messy, anti-social, unhygenic and ultimately unsatisfying.

I suggest therefore that moderators remove all such mess immediately unless sufficient stimulation and foreplay have taken place, say a 2% intra-day move, or 5% on the week.

This should ensure great gratification and less mess.

I think that it is very significant that since the US announced a rise in interest rates at around 19:00 hours last night the value of the pound has fallen 1%, it is a very sudden drop at exactly the time the US announced it.

http://www.fxstreet.com/nou/graph/streamin...p?symbol=GBPUSD

whether it recovers again is another matter but the significance of the US announcing this and the drop are not mere coincidence

Share this post


Link to post
Share on other sites
Guest wrongmove

I think it will be interesting to watch the pound over the coming weeks and months, but today's movement is just noise, IMHO. The graph below is pound v dollar for the last month. 0.5% falls and rises are not rare. The pound was lower than this just two weeks ago.

poundvdollar.png

I would be more worried about the pound if the US ecenomy didn't look so bad. Usually, when IRs here drop below US, the pound takes a beating. But usually, the US eceonomy looks better than the UK in terms of growth prospects. I don't believe that is the perception at the moment. I think today's drop may be more to do with the current account deficit announced today. Unlike yesterday's Fed rise, this was a bit of a surprise to the markets. I would add that Bernanke sounded more hawkish that expected, and this may be a contributory factor.

post-210-1143644312.png

Edited by wrongmove

Share this post


Link to post
Share on other sites

Uk exports in 2005 were $483,700,000,000

Uk imports in 2005 were $347,200,000,000

Thats a gap of $136,500,000,000

A 1% drop on the value of the pound costs the economy an extra $1.3billion (or a millenium dome if you find numbers irrelevent) on our trade gap. The volume of the gap is growing as the North Sea runs dry (production shrinks 7% YOY).

Over 2005 sterling fell about 11% vs the dollar (from ~1.94 to ~1.74), the fed is climbing, the BoE is stagnant, simple really.

The UK is hemorrhaging capital through our high inflation imports, mainly fuel and energy.

The Base Rate needs to start tracking the Fed, soon, very soon.

Good old BBC - the worst figures since the War and their main business story on the website is that Liverpool might get a bid!!!

Share this post


Link to post
Share on other sites

Marina, responding inside a quote makes it difficult to quote you. Sorry, but it is the easiest way to respond to a number of points.

What global deflationary pressures are you refering to? The fact that more and more countries are industrializing and producing goods and food at what seem to be ever-reducing prices. I can buy a punnet of Strawberries - all year round - in Tescos for 99p. Africa hasn't even started yet. There is a whole continent of poor people for the multi-nationals to exploit.

There's more economies competing for fewer resources. Err, not sure what you mean here. There are lots of resources - with supply blips as demand varies. What are we short of? Now?

Are you refering to wages or prices? After all, the two are esentially opposite in effect. I have often said on this board - in London in the early 1980s the buses used to have adverts on the back - become a bus driver - I used to work in London and saw them all the time - £260 pw. Adverts on our local buses still carry the same advert! Over 20 years later the money is still the same! This is the global deflationary pressure in action. As skilled jobs in manufacturing have gone, they have been replaced by semi-skilled or unskilled jobs in service industries. The wages paid are cr@p. The workers have no bargaining power. Plenty more unskilled workers in line. For my money - in general terms - we have deflationary pressure on plenty of prices and also on wages.

Share this post


Link to post
Share on other sites

Simon, don't taunt the bears, they don't like it ............. !

:ph34r:

I'm not, I am a bear, I can just spot when someones clutching at straws.

Edited by simon99

Share this post


Link to post
Share on other sites

I would call it a battering. It's against almost every currency. Especially against the euro. I have not been watching the currencies too long and sizable falls and rises against the $ seem common but not the euro.

Share this post


Link to post
Share on other sites

I would call it a battering. It's against almost every currency. Especially against the euro. I have not been watching the currencies too long and sizable falls and rises against the $ seem common but not the euro.

Here's a link to 12 months of the £/euro rate = nothing too dramatic there - it's been higher, it's been lower.

http://newsvote.bbc.co.uk/1/shared/fds/hi/...welve_month.stm

If you've not been watching the currencies too long then maybe you need to look up some long term charts before you call it a battering. There are regular fluctuations far bigger than today's. Very recently the pound was lower than today, and it has been much weaker in recent years. The Euro has got gradually stronger, but that's no great surprise given the long term worries about the dollar.

As I said, the pound may well get a genuine battering at some point, but best keep your powder dry until it really happens.

I think some of the amateur economists here have got over-excited about sterling collapsing as part of a wish-fulfilment fantasy which involves interest rates going sky high to stem a collapse in the currency. Then magically overnight all BTLs panic and leave the market, house prices collapse, the genius STRs are vindicated and all pick up country mansions for the money they got selling for their semi.

It might happen, and might be the gist of the long term story. But in the short to medium term, sterling could fall a bit without it being a complete disaster ($1.40 wasn't the end of the world a few years ago), and a fairly small interest rate hike to keep up with the dollar would probably be enough to stem the tide if there is a bit of a fall.

(PS - not to diss amateur economists... we're all still trying to guess what will happen next. This particular train of thinking based on the £/$ rate tends to wind me up though, because it seems a bit obsessive/clutching at threads)

Edited by Magpie

Share this post


Link to post
Share on other sites

(PS - not to diss amateur economists... we're all still trying to guess what will happen next. This particular train of thinking based on the £/$ rate tends to wind me up though, because it seems a bit obsessive/clutching at threads)

Looks like those who think the pound is getting a battering are getting a battering.

1% doesn't seem like much, until you have to convert a significant sum of money to another currency... then you really feel it.

Share this post


Link to post
Share on other sites

So, what exactly would happen if US interest rates actually did go as high as 5.5%, as some analysts expect, while sterling sits at 4.5%, while the government, like the emperor's new clothes, stubbornly refuses to even acknowledge that inflation is getting ever more rampant?

The good news here is that this spells the end of any more interest rate cuts in the UK this year and if the US raises again the UK may have to follow suit. This should finally signal the end of the alleged 2006 house price bump.

Share this post


Link to post
Share on other sites
Guest wrongmove

The pound is up again today. So is pretty well every stock market on the planet. Just noise.

Stockmarkets

Edited by wrongmove

Share this post


Link to post
Share on other sites

The middle of 2001, GBP/USD was 1.36

Right now its at 1.73 (roughly, not writing the pips).

So what's the big deal? The pound has been a lot weaker than this and very recently too. It's got a long way to fall against the US Dollar and the Yen, and probably less room to fall against the Euro ans Swiss Franc (as looking at a chart for the past 5 years, it's already fairly weak against these currencies).

My point is its a bit silly getting excited over normal fluctuations in a currency pair. GBP/USD is a particularly volatile pair, and normally has quite large price swings on a short term basis (daily, weekly).

*Disclaimer: Amateur opinion. May be 30ll0[ks :)

Share this post


Link to post
Share on other sites

The middle of 2001, GBP/USD was 1.36

Right now its at 1.73 (roughly, not writing the pips).

So what's the big deal? The pound has been a lot weaker than this and very recently too. It's got a long way to fall against the US Dollar and the Yen, and probably less room to fall against the Euro ans Swiss Franc (as looking at a chart for the past 5 years, it's already fairly weak against these currencies).

My point is its a bit silly getting excited over normal fluctuations in a currency pair. GBP/USD is a particularly volatile pair, and normally has quite large price swings on a short term basis (daily, weekly).

*Disclaimer: Amateur opinion. May be 30ll0[ks :)

2001 the economy was doing well. People had money to spend. Now a lot of peoples money is tied up in housing and paying bills (that have shot up). So if the pound devalues, buying anything like oil and imports are likely to go up too, squeezing the purchasing power of Joe Bloggs even more. Therefore people are likely to spend EVEN LESS. This isn't good for businesses or jobs!

Share this post


Link to post
Share on other sites

The pound isn't really collapsing because the dollar is falling too.

Look at gold today ($574) and oil ($66).

The pound and the US dollar are collapsing in value as compared to anything except chinese manufactured goods.

Share this post


Link to post
Share on other sites

The £ has made great gains against the $ today but the £ continues to fall against the euro.

These are the government stats on trading partners

http://www.uktradeinfo.com/freedata/Ctry0106.xls?

The majority of imports are from Euro zone countries so the £ falling against the Euro has an effect on importing inflation. Of course commodities like oil are traded in dollars so that is also significant.

1 GERMANY DE 12.65

2 USA US 8.47

3 FRANCE FR 7.64

4 NETHERLANDS 6.36

5 NORWAY NO 5.93

6 CHINA CN 5.33

7 BELGIUM BE 4.56

8 SPAIN ES 3.55

9 ITALY IT 3.47

10 IRISH REPUBLIC 3.19

Share this post


Link to post
Share on other sites

The pound isn't really collapsing because the dollar is falling too.

Look at gold today ($574) and oil ($66).

The pound and the US dollar are collapsing in value as compared to anything except chinese manufactured goods.

And back to the world of reality and facts... Here's the £/Euro chart again.

http://newsvote.bbc.co.uk/1/shared/fds/hi/...welve_month.stm

Nothing too dramatic at this stage. Nothing much has changed in the £/Euro relationship because of a US rate hike, so it seems a bit of a diversionary strategy to bang on about it. The pound isn't collapsing against the dollar as predicted, but "never mind, quick quick look the other way, it's down against the Euro". Gold is on a bull run, oil has been going up for other reasons. That's not a sign of a currency collapse either.

As I've said before if sterling really falls it will be significant, but happily (speaking as someone who does international business) it's not happening in any major way just now.

Maybe we should all stop praying for economic meltdown, and sit patiently to sit what happens?

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 336 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%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.