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Guest wrongmove

The Strong Pound

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Guest wrongmove

The strong pound

"US visitors to the UK have long learned to insulate themselves from shock by pretending that £-signs in shop windows are in fact $-stickers. But with the pound now trading around $2, the difference may just be too much to bear. Some resulting woes in the UK tourism and manufactured goods exporting sectors have been real. Nevertheless, the strong pound has been largely positive for the UK, playing to the strengths of the British economy.

The recent fall in the dollarnotwithstanding, the pound has enjoyed continuous strength on a trade-weighted basis for 10 years. When sterling was ejected from the European exchange rate mechanism in 1992, the withdrawal prompted a drastic fall of the trade-weighted pound by 15 per cent. It then rose back to pre-1992 heights between late 1996 and May 1997 - a level it has kept ever since.

The strong pound helped speed a far-reaching move from manufacturing to a service economy, which now accounts for 75 per cent of UK gross value added - up from 65 per cent 10 years ago. High exchange rates in the UK made imported goods cheap and kept domestic prices in check. Goods prices in the UK stayed almost constant over the past decade, whereas in the US goods inflation averaged an annual 1.6 per cent..........."

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...which might lead one to think:

"why is inflation so high when we've got a strong pound? And what happens then if we stop having a strong pound? Will that happen?"

Oh dear. Interest rates to 10% to protect the £

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Strong pound..... it's dropped about 10% against the Canadian Dollar in the last few months. Just when I'm about to move there (Visa permitting.... fingers crossed). Talk about bloody unlucky! Do any of you financial gurus have any idea why this is.... and is it going to get worse??

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Strong pound..... it's dropped about 10% against the Canadian Dollar in the last few months. Just when I'm about to move there (Visa permitting.... fingers crossed). Talk about bloody unlucky! Do any of you financial gurus have any idea why this is.... and is it going to get worse??

Sebastian is the person to ask about the Canadian Dollar.

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