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How Long Until The Pound Starts To Fall?

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Guest mattsta1964
The pound is way overvalued, yet there seems little sign of a correction. Surely something has to give.

I think Sterling has a little way to go yet. Give it another 6 months. The dollar will continue to weaken. Sterling wont be far behind. The emperor has no clothes

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The pound is way overvalued, yet there seems little sign of a correction. Surely something has to give.

High Interest Rates and going higher. Wait till the currency markets fcuck with Sterling like they did in early 90's.

Some say 2.10 is on the way, got to wait and see.

When BOE signals a pause in rates and the rest of the world carries on raising, goodbye sterling.

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Everyone is expecting UK ir to go up to 5.75pct short time and some are anticipating eventually 6pct. This should keep the pound strong. On the other hand the Fed are most likely to leave their ir unchanged and with the present jitters about subprime the dollar is weak. The yuan is pegged to the dollar so as the dollar devalues so does the yuan ensuring that Chinese goods remain competitve. It may be that London prices are being bolstered by yuan purchasers who see this as a way to protect the value of their currency as well as a base for their family in an English speaking country.

Probably a good time to go on holiday.

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Morgan Stanley (as per the latest economist) thinks that all currencies are overvalued against the USD, except JPY which is "probably" undervalued

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The dollar.

Sure sterling is a weak fiat currency but so is the dollar and others.

Whether Stg is the weakest I don't know as someone once said "it's a race to the bottom"

Maybe the real standard here is the yellow metal but ...

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Real Value......

And when a poor man came to their land they would give him silver and gold, and cause a proclamation in the whole city not to give him a morsel of bread to eat, and if the stranger should remain there some days, and die from hunger, not having been able to obtain a morsel of bread, then at his death all the people of the city would come and take their silver and gold which they had given to him.

And those that could recognize the silver or gold which they had given him took it back, and at his death they also stripped him of his garments, and they would fight about them, and he that prevailed over his neighbor took them.

Gold, paper? When the chips are down........ :(

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The pound is way overvalued, yet there seems little sign of a correction. Surely something has to give.

.....like a house, currency is valued at what people are willing to pay.....while GBP sentiment is 'interest rates rising' against say USD, then it will climb in currency exchange rate terms....more so when the US are scratching their heads wondering which way to go.....and trying to decide what this sub prime 'infection' is likely to do to the rest of their economy.....the currency market can swing either way at any time....beware... their sub prime scene is already affecting world equity markets....

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current sterling exchange rate is the only thing keeping general inflation from spiralling

ok i think 2 -3 months months and the pound will drop to £1.90 or less to the dollar.

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Sure sterling is a weak fiat currency but so is the dollar and others.

Whether Stg is the weakest I don't know as someone once said "it's a race to the bottom"

If you read the economist, money supply stats for all countries show

that central banks are mostly inflating their broad fiat money supplies at a rapid rate.

The way I look at it is that the foundation of the global monetary system is the US

dollar, and that foundation is tied to energy availability (not gold anymore).

If you believe the theories about peak oil and the petrodollar, it is hard not to

reach the conclusion that the dollar is ultimately doomed.

However sterling has no more of a sound basis than the US dollar, and neither

does the Euro or any fiat currency anywhere on the planet. Except maybe

swiss dollar or guernsey coin.

So basically, the pound is falling now, inflation is global, all fiat paper currencies are

losing purchasing power.

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Glad you are all looking at 'cause & effect' - i.e. macro causes of HPI -

Fiat currencies are the root cause here -

The 'Austria' school of economics seems to explain how the world is working today (fiat money system), and an interesting articles can be found at :

http://www.dailyreckoning.com.au/crack-up-boom/2007/06/26/

“‘This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people in the country who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices, although the extent of this rise will not be the same in the various commodities and services. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and concomitantly increase their cash holdings. As long as such ideas are still held by public opinion, it is not yet too late for the government to abandon its inflationary policy.’

“But then, finally, the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against ‘real’ goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them.

++

Best Wishes / Clueless

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Sterling and HPI are tied together tighter than any other pairing in the economic universe.

As long as Merv keeps IR accommodative (below the effective rate of inflation) the pound will soar making Chinese tat even cheaper and exports even dearer.

As goes HPI so goes the pound and Gordon's miracle along with it.

What will cause a sterling crisis? When the upward momentum to IR is seen by the markets as over. THis is why Merv has to string it out for a long as he can knowing accommodative hikes have, as he admitted today, "limited effect."

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The consensus for years has been that sterling is overvalued against the dollar.

The big question is: will sterling fall against the euro? That will mark the beginning of the end for sterling.

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