Tuesday, Dec 12, 2006

US banks predict sterling set to crash

Telegraph: US banks predict sterling set to crash

"Goldman Sach has advised sophisticated investors take out a "short" position against pound on the derviatves markets as its top trade for 2007, a bet that the currency will fall."

Posted by millard @ 10:17 AM (524 views)
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1. paul said...

The UKs currency, like its housing market is held up by nothing more than hot air.

Tuesday, December 12, 2006 12:20PM Report Comment

2. sovietuk said...

Good, a long and and overdue welcome to the end of the fantasy land hot air prosperity of recent years and all the unaffordable nonsense that goes with it. Things need to be simple, hard and unpleasant here for a few years so that people understand what reality is again. :-)

Tuesday, December 12, 2006 01:56PM Report Comment

3. Ticktock said...

I think there is pobably a little bit more holding up Stirling at present, although little of it is pleasant, and none of it is sustainable in the long run.

Worsening conditions elsewhere in the world, combined with our proud status as a 'anything goes' global financial whore, will probably continue to provide large inflows of cash from hedge funds, gangsters etc. for a while yet.

Tuesday, December 12, 2006 04:27PM Report Comment

4. Worldtraveller said...

Oopsy daisies. I'm afraid the writing is on the wall for the "miracle" economy." Poor Gordon is out of cash to spend and house prices are out of control. A bit of pain is what the doctor prescribed.

Tuesday, December 12, 2006 07:32PM Report Comment

5. Bangybongo said...

a few observations:

sterling dropping means import costs rising, inflation and higher interest rates as the ultimate consequence. inflation already outstripped target for the past nine months and a drop in sterling could excacerbate that and make 5.25 look very optimistic.

sachs are reported as saying that europe's economies will grow faster than ours. that may make their property and employment markets more attractive compared with london than they have been, dissuade property speculation and mean less bonus-hunting execs coming to london and flooding the top end of the property market.

a few less wealthy russians snapping up the top end in favour of european ``hot spots'' could also be a possibility. i don't know if the russians, who are purportedly buying london's top end, are availing themselves of u.k. legislation that doesn't exist in the rest of europe (regarding property buying). but if they are equally able to buy european properties, then maybe that source of demand could also dry up.

aside from the article, china may try to slow its production next year and its citizens consume more of what's made there (china has said it wants to slow production growth and create its own consumer market). if that does happen, chinese manufacturers may find more pricing power, another source of possible inflation for import-hungry britain.

inflation will come in well above 5.25 percent next year. 6.25 to 6.5% looks more realistic.

Tuesday, December 12, 2006 08:20PM Report Comment

6. Enuii said...

Had a big blow out on fairy lights this year in a last splurge on Chinese made Nik-Naks before the economic rot sets in in the new year.

Our little semi now looks like it's worth zillions, all glittery 'n' sparkly like, just like Nu-Labour's economic miracle.

Tuesday, December 12, 2006 09:47PM Report Comment

7. Bobsta said...

So what currency do folks recommend I stick my savings into, whilst waiting for my cut-price house? ... Euros? Dollars? A mix?

Tuesday, December 12, 2006 11:00PM Report Comment

8. Dohousescrashinthewoods said...

I still have a 100 Swiss Frank note from 2001.
I keep it as a reminder that that piece of paper earns more "interest" than my bank account.

If the pound starts to fall relative to the dollar, presumably dollars are good, but how far will the US economy slide?
My (inexperiencd) idea is to buy some more Swiss Franks and keep them under the mattress.

Feel free to disagree as I am with Bobsta - what's a good bet when economic turmoil looks possible?

Wednesday, December 13, 2006 12:25PM Report Comment

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