bigglesworth

Sorry
Sterling dropped rapidly from 1.23 a year or two back, through 1.20 without a blink. The next 18 months were a nervous time.

The average value of Sterling against the main Euro currencies over the past 30 odd years is probably about 1.25 to 1,30. Adding in the newer members of the EZ complicates the matter as it is hard to estimate what their free market exchange rate would have been, but I assume (quite arbitrarily and perhaps unreasonably) it would reduce were they included. Therefore this is quite a good arte, and one I can live with.

What I decided to do (and please note my finessing comment) was to buy three years requirements forwards. This is not without cost (I would have to either pay the interest on a bank loan or swallow the loss of interest on a bank deposit) to do it.
What I am now doing is mentally gambling that the Euro will go pear shaped. Given the huge political capital invested in keeping it afloat this is probably not the cleverest ploy.
But once a trader, always a trader. And I was a trader before the word was invented.

dunroving

Just spotted this news article on the BBC Web site.

When the experts say it is rising "inexorably", that means it will probably drop to $1.60 over the summer.

bigglesworth

Yes the BBCs understanding of matters financial is becoming a joke. It is not that long since they were bemoaning the collapse of sterling. They managed to pick the bottom then alright. I remember Peston's weird, whale-singing analysis.

Perhaps they have picked the top now - it is down over two cents in the last couple of days.

Pistolpete2

As a Sterling seller in the next couple of weeks I was wondering what has caused dollar strength. I'm guessing it is the US unemployment figures which to some point to the end of easing and maybe earlier than Yellen-indicated rate rises.

At the same time I sense concern in UK exporters that any further Sterling appreciation will nail or curb future growth for them. And then there's the UK deficit - still UP THERE.

I was hoping for $1.7150 but I'm would be really glad of that now.

Pulaski

Likewise.
Also likewise. Understanding the markets and what drives them doesn't make it any easier to pick the right time and the right rate to exchange at, it just increases the anxiety and stress. .... Or at least it does in my case.

holly_1948

I have absolutely no idea which direction it is headed.
But the consensus money says that things are going to be more volatile than they were as ever more of the world is consumed in war. So a lot depends on how risk-averse you are.

There is also a growing risk of "bail-ins", see this week's news on FBME Bank, Cyprus. So really the most important thing about your money is the old adage "Don't put all your eggs in one basket!". And that caution is probably more true today than it has been in living memory.

Pulaski

While much is uncertain, political instability may be increasing, and the stock markets are as volatile as they have ever been on every timescale from intra-day to whole decades, the volatility of exchange rates has steadily declined since the 1970's. The European Onion, and later the Euro, has bound together many of the world's largest economies, creating a single currency which is inevitably more stable than the individual countries' currencies, and simultaneously less prone to violent fluctuations against the USD, GBP, JPY and other major currencies.

Sally Redux

So we were about to press the button on a partial transfer but the dollar now seems to be gaining strength

dunroving

Therein lies madness ...

it keeps going in that direction.

Sally Redux

Thanks.

Michael

The US$ against the Euro has been very strong this week with the EURO dropping about 4 cents. The British pound has remained stronger dropping only about 1 cent.

The Euro seems to be dropping since Draghi (ECB President) has pretty much stated that he expects the Eurozone will keep interest rates at rock bottom for the next four years but the Federal Reserve is easing bond purchases for QE3 and most expect that the Fed will start increasing interest rates next year. That combination should make the dollar stronger. Many expect the Euro to be in the mid 120s by the end of the year.

Although the UK economy is outperforming the Eurozone, if the Euro keeps dropping against the dollar and the pound holds up against the dollar, this will be bad for the UK economy since a major portion of it's trade is with the Eurozone and exports will likely fall so I expect that the pound will drop so that won't happen. It probably won't drop as much as the Euro against the dollar but suspect that the UK central bank will keep loose monetary policy for longer than was expected so that the pound doesn't become too strong in relation to the Euro.

Therefore the US$ should increase against both the Euro and the pound but more against the Euro.

The Eurozone monetary policy is currently so loose that the Spanish 10 year bond interest rates are currently below the 10 year treasury and the 10 year Guild. It's hard to believe that one of the PIIGS that had intrest rates near 8 percent a couple of years ago is now below the treasury and Guild but that is primarily because of the Eurozone's very loose monetary policy. With interest rates kept low in the Eurozone and rising interest rates in the US and the UK, capital will likely flow towards the US and UK driving the Euro lower.

The Fed won the first battle to drive down the dollar to kick start the US economy and the Eurozone was late to the game but now the Eurozone monetary policy seems to be to drive the Euro down to kick start the Eurozone economies. Up until recently, that policy was blocked by Germany which has a strong economy and was more concerned about inflation than growth.

dunroving

Just to add a wild card, there have been rumblings that Scottish independence would result in a run on the pound, so maybe as the vote gets closer (September 18th), there may be some downward pressure on the pound ...? If (when) the vote is No, I could see an upward bounce in the pound.

Pulaski

Only if the opinion polls tighten considerably. The trend has recently been reported to be the opposite, with the "no" vote strengthening. A recent poll for The Independent reported 49% expected to be worse off in an independent Scotland. In Scotland of all countries, people are never going to vote for a situation where they would expect to be worse off financially.

Sally Redux

Still haven't pressed the button.

Novocastrian

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