Monday, September 8, 2008

The pound may be “massively overvalued against the dollar,”

`Overvalued' Pound to Fall 20% as Darling Despairs (Update3)

Currency traders are starting to take the British government at its word, putting the tumbling pound on course for the worst year since 1992. The pound is about 20 percent too strong against the dollar, even after falling more than 10 percent this year, according to New York-based International Foreign Exchange Concepts Inc., the world's biggest currency hedge-fund company. Futures traders became more bearish on the U.K. currency than at any time in the past 16 years.

Posted by malct @ 08:05 PM (1164 views)
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11 thoughts on “The pound may be “massively overvalued against the dollar,”

  • The pound may not be in great shape – but then the US economy is contracting (ignore their GDP figures, I and many others do), the US housing market is diving, and the US gov has just signed on for $300 billion in subsidies in a weekend.

    Despite all that I bet the liars can make the dollar go up more!

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  • Looks like gold is the only safe haven then!

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  • Imbecilic commentary, as ever. Why would making British exports more competitive cause our Chancellor to despair?
    In the short term maybe it’ll be painful but in the long term, mankind adapts and this is precisely the sort of thing to cause it.
    Remember the 90’s boom came AFTER Sterling was ejected from the ERM.
    Bring it on!!

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  • Could this force the bank of england to increase interest rates at its next meeting to at least give some support to slow the collapse of GBP.

    My savings are for a house in UK, looked at buying abroad a few years ago and the prices then didn’t pursuade me in the end so now the GBP has devalued 20% against the Euro I won’t be doing so for a while, I’ll by UK property when price is right and before inflation gets at my savings.

    And I repeat the statements made above. The USA has just orchestated an enourmous bailout of what was driving it’s economy.

    This clearly means that the housing market is incapable of running/fueling the economy forever. So they have bailed it out as that is what they see as the problem.

    USA are caught in some sort of negative loop cycle which clearly can only get worse not better.

    The GBP will go through a rough patch, but in theory significantly lower house prices and a weak GBP should help the economy significantly – I think. Pity we have to wait ’til 2010 for Nationwides 25% fall. Given we’re vitually halfway there though and we’re still at the beginning 25% peak to trough should be reached by April/May 2009.

    As a side thought is the Nationwide Chief Exec announcement of 25% fall a pre-curcer to laying off Ms Early. She must be pooping it. Nothing for her to do now ’til we reach -25%. Her boss has just done in one sentence 18 months of her work. Nice one.

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  • “according to New York-based International Foreign Exchange Concepts Inc., the world’s biggest currency hedge-fund company.”

    …………what do you expect a hedge fund to say. These funds capitalise on market manipulation, if even half their ‘predicted’ drops occur they will clean up and buy another couple of yachts and another house on Bishops avenue. They are the parasites of the financial systems, manipulating and feeding of misfortune and rumour. No!!! I am not very impressed that the greed of our societies have bred such morally and ethically bereft beasts, whom we are told to call the ‘Masters of the Universe’. I do, ofcourse hope sterling survives, intact, these constant attacks and, as sneaker says returns stronger as it did after the ERM debacle, but I fear GB has other treats in store for the great British public, with a central bank in Frankfurt. I hope I am wrong.

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  • I remember there was a post about “the race to the bottom” between Pound, Euro and Dollar. I guess it is still the case. No one knows how bad each of them is.

    You can say Spain and Italy is going to bust. But then UK isn’t any better. How US will do after the bail out two Fs? Who knows?

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  • “The pound is about 20 percent too strong against the dollar, even after falling more than 10 percent this year”

    If the £ is 20% too strong against the $, which itself is basically worthless, then we really are in trouble. The phoney express that has caught the $ at the moment is surprising, to say the least. But it won’t last. Stock and the $ will turn south after this suckers rally, at which time the headlines will be “The $ is about 20 percent too strong against the £”. Ultimately all we are saying is that the stink from this dung heap (£) is not quite as bad as the stench that dung heap ($).

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  • “The pound is about 20 percent too strong against the dollar, even after falling more than 10 percent this year”

    If the £ is 20% too strong against the $, which itself is basically worthless, then we really are in trouble. The phoney express that has caught the $ at the moment is surprising, to say the least. But it won’t last. Stock and the $ will turn south after this suckers rally, at which time the headlines will be “The $ is about 20 percent too strong against the £”. Ultimately all we are saying is that the stink from this dung heap (£) is not quite as bad as the stench that dung heap ($).

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  • Sneaker

    As the £ Falls against the dollar the price of our oil ( if the crude price in $ remains static ) and then all other raw goods rises sharply, a 25% correction in the exchange rate really equates to massive inflationary pressure, i can see interest rates having to rise in the near term

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  • str 2007 said

    If you have savings adly you might need them more than a house.

    Dont hold too much stay by 2010 its the figure of the hour, most financial bodies dont want to look further, i have seen grim news for the world economy up to at least 2016 and most VIs obviously need to now fix a bottom to the market and make it soon.

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  • Surely this would be good for us exporters who’ve struggled for so long? You know, those of us who still actually produce something tangible – not hot air and concocted dodgy financial deals.

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