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crash 2005

£ Falling Against $ Today

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wake me up when it drops below 1.70 :)

The Euro/Pound picture is interesting. Sterling has now lost 3.5 cents in the last month and still dropping.

Gordon may think he can hide inflation from the masses, but you can't fool the markets. Just another reason to be in Gold IMO.

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Hi

What is this boards fascination with the US$ moving a little bit.

Read this about the pass through rates of infation from exchange rates/Oil

http://www.bankofengland.co.uk/publication...2/speech171.pdf

That report ignores the fact the UK is post peak oil (written in Q1 2002) and that our fuel import gap (dollar denominated) grows larger every day.

Edited by ?...!

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Oh, for ****'s sake, not another "the pound is crashing" thread. We went round and round this yesterday on the "Pound is getting a battering" thread.

It's not crashing today - it wasn't yesterday. It's been in the same region for a while, and has been much lower in the recent past. At some point it may fall significantly, but please stop going on about it when it drops 0.0001% or so.

This is all to do with a wish-fulfilment fantasy, whereby US rates rise, the £ tanks forcing the BOE into raising UK rates, the UK economy tanks, every BTL in the land panics and puts their house on the market on the same day, and hurrah house prices fall. Dr Bubb is declared king, and everyone admits HPCers were right all along.

So someone starts a "£ is tanking" thread, everyone jumps in with speculation about rates etc without noticing that the £ isn't sodding well tanking at all.

It might sometime. Talk about it when it does.

Edited by Magpie

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That report ignores the fact the UK is post peak oil (written in Q1 2002) and that our fuel import gap (dollar denominated) grows larger every day.

Because that isn't what the report is about, it's about the pass through rate of inflation cause by a rise in oil/ fall in exchange rates, it doesn't care how it is caused and the report knows that oil is $ denominated.

What the report is showing is that if oil doubles in price or the exchange rate moves from 1.7 to 1.5 then the effects on UK inflation will be lower than in the past

What was oil when this was written $25 a barrel? Now its what $60K a barrel. Yet inflation has stayed flat. Now if you put this into the economy of the 70's or 80's then inflation would have picked up. This report predicted that the pass through rates of oil and exchange rates were much less than before.

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Because that isn't what the report is about, it's about the pass through rate of inflation cause by a rise in oil/ fall in exchange rates, it doesn't care how it is caused and the report knows that oil is $ denominated.

What the report is showing is that if oil doubles in price or the exchange rate moves from 1.7 to 1.5 then the effects on UK inflation will be lower than in the past

What was oil when this was written $25 a barrel? Now its what $60K a barrel. Yet inflation has stayed flat. Now if you put this into the economy of the 70's or 80's then inflation would have picked up. This report predicted that the pass through rates of oil and exchange rates were much less than before.

I'm not sure about flat inflation, I think once the North Sea dies and we have to import oil and gas maybe at over $100/barrel then we will see huge inflation

Heres a chart to show how the North Sea has done. This was central to our economy under Tatcher.

g0000001.gif

Edited by ?...!

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I am a little confused about this, how does having North Sea Oil prevent inflation? If the price of oil goes up, it makes no difference that we actually make it - North Sea Oil companies charge just as much for it as everyone else does - so producers in the UK that make things with oil are still paying higher prices. If we are talking about cost push inflation, I don't see why it makes a difference that we make it regarding inflation.

Maybe I am missing something here, or perhaps we are talking about demand pull inflation and that an oil shock does not affect us - but I am not sure. Can someone explain?

Yep you are right the RPIx 2002 was 2.3 and now it 2.4

Blimey as flat as a pancake (well ones I make), and that is despite oil almost tripling

I think there are concerns about how accurate that figure is. Most of the things that have inflated in prices (particularly asset bubbles) are not included in the RPI.

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So someone starts a "£ is tanking" thread, everyone jumps in with speculation about rates etc without noticing that the £ isn't sodding well tanking at all.

Or someone comes on to rant about the title of the thread, without realising that it's actually true. ;)

Evidence: Pound Sterling v Euro. Three month picture below.

2.bmp

2.bmp

Edited by Flash

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Yep you are right the RPIx 2002 was 2.3 and now it 2.4

One made-up number is roughly the same as another made-up number. Meanwhile, most things I spend money on are up more like 6-8% per year.

Oh, but I forgot: because I've switched to cheaper alternatives whereever possible, that means inflation is low, right?

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Or someone comes on to rant about the title of the thread, without realising that it's actually true. ;)

Evidence: Pound Sterling v Euro. Three month picture below.

2.bmp

1) That's the £/Euro - the thread says the £ is falling against the $. £ falling against $ has been widely predicted here because of the US rate hike, but as yet hasn't materialised. Not much point in saying "Quick, quick, look the other way..." The thread title is misleading, as was yesterday's similar one.

2) Here's twelve months of the £ vs Euro. Nothing too dramatic looked at over this period, and nothing has changed in the relationship to make it tank. The Euro has been getting a bit stronger as there are worries about the dollar. The pound is at the lower end of a range, but has been lower recently, and wider fluctuations than today's are common. Today's change? Down 0.03%. Not too scary.

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

As I keep saying, it might happen. But it doesn't get us anywhere to pretend it has happened already.

Edited by Magpie

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I am a little confused about this, how does having North Sea Oil prevent inflation? If the price of oil goes up, it makes no difference that we actually make it - North Sea Oil companies charge just as much for it as everyone else does - so producers in the UK that make things with oil are still paying higher prices. If we are talking about cost push inflation, I don't see why it makes a difference that we make it regarding inflation.

Maybe I am missing something here, or perhaps we are talking about demand pull inflation and that an oil shock does not affect us - but I am not sure. Can someone explain?

I think there are concerns about how accurate that figure is. Most of the things that have inflated in prices (particularly asset bubbles) are not included in the RPI.

Back in the 70's and 80's it was a nationalised industry. World oil prices didn't matter.

It still took the same blokes the same amount of time on the same wages to recover the same amount of oil every day. The UK consumers were pretty much garaunteed their fuel because we got priorty over exports. Hence protection from inflation.

Now inflation is free to do as it wishes.

Oil is pumped ashore to the UK from the North Sea and sold from that point on the beach.

That source is shrinking so we are ever more reliant on competing on the global market, which means bidding against the US, China, Japan, the EU, India and all the other countries with a shortfall.

The market is getting crowded and we are only just arriving.

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Oh, for ****'s sake, not another "the pound is crashing" thread. We went round and round this yesterday on the "Pound is getting a battering" thread.

It's not crashing today - it wasn't yesterday.

ah. A Market Maven. Obviously hasn't seen any charts like this then.

uds.jpg

post-1065-1143814065.jpg

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ah. A Market Maven. Obviously hasn't seen any charts like this then.

Very clever graph, but it's a slightly different picture if you add the year before as well istn't it? £1 to $1.90 was a peak, hardly the expected long run rate.

E.g.

5 years: http://uk.finance.yahoo.com/q/bc?s=USDGBP=...l=on&z=m&q=l&c=

2 years: http://uk.finance.yahoo.com/q/bc?s=USDGBP=...l=on&z=m&q=l&c=

A crash of the £? I think not. I wish it would as I am an exporter, but can't see that happening yet.

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A crash of the £? I think not. I wish it would as I am an exporter, but can't see that happening yet.

What are you exporting padders? or if you are reluctant to share such info what sector?

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Very clever graph, but it's a slightly different picture if you add the year before as well istn't it? £1 to $1.90 was a peak, hardly the expected long run rate.

E.g.

5 years: http://uk.finance.yahoo.com/q/bc?s=USDGBP=...l=on&z=m&q=l&c=

2 years: http://uk.finance.yahoo.com/q/bc?s=USDGBP=...l=on&z=m&q=l&c=

Exactly - I've been paying and receiving in dollars over the last six years and have seen the dollar at $1.39 and $1.95, and most places in between and I've seen some sharp falls and rises - they can be very uncomfortable for the budget so I watch closely. I do know what I'm talking about, and I think people here tend to get overexcited by small shifts on a regular basis.

(CrashIsUnderWay - Not sure what a market maven is but it sounds like a good insult. Where's it from?)

Edited by Magpie

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Market Maven is a compliment, so I assume he either dosen't understand what it means or was being sarcastic:

Thanks - I'll take it as sarcasm then, but it's OK, I have thick skin. When the mavens here learn to take a deep breath and count to ten before calling a sterling crash I'll stop going on about it.

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I was being sarcastic.

I've made a lot of money recently by catching those little attempts back at the £.

It's an interesting game, and as u say, although the moves may not appear large, the trend is up.

The only thing that can stop it is for the boe to raise rates.

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I was being sarcastic.

I've made a lot of money recently by catching those little attempts back at the £.

It's an interesting game, and as u say, although the moves may not appear large, the trend is up.

The only thing that can stop it is for the boe to raise rates.

I think in the end that might be true, but it's certainly nothing precipitous at this stage, and I think there is a bit of wishful thinking going on with the number of times here people get excited about it. Plus 1) the govt may not be too concerned about a slow drift and 2) it may not need that big a hike to settle things down, at least for the time being.

Fair enough if you are gambling on little ups and downs, it's all good fun then. You can play that game any time. For me, I tend to have to operate with a margin for error on buying and selling as my business might be paying out costs but getting the final payment a few months later - a few cents up or down aren't too stressful, but major movements in currency, especially £/$ are potentially a big problem. So I've often seen people on this site calling a crash in the morning only to go and check and find it's not really happening.

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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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