MrCro

still think they'll be a spike and I'll BUY BUY BUY!!!

freebo

Nice work if you can pull it off, problem is if there is a spike human nature is to think "wait, it'll go higher" after all you just said you started the thread in a panic at $1.93 and you wish you could buy at that now.

Better to scale into & out of positions, no-one on earth gets it 100% right.

MrCro

don't remind me please, that day in October 2008 still haunts me when I looked at the rates and went 2.60 ooh the £'s doing well against the aussie!

Then it slid down ever since and I kept thinking it would come back up!

Easy to say now! Would have been a dream at 2.60 now - just my luck, but we'll see what september brings when we go. I can leave most £'s in UK too and watch and wait!

freebo

No one knows for sure, maybe the recent 1.78 was the spike

freebo

...Because although the AUD had been weaker of late, the pounds not looking too clever at all

http://www.independent.co.uk/news/bu...s-1994909.html

DownUnderPaddy

I'm inclined to think, on the balance of all the evidence, it may well have been the 'spike' for now.

The GBP dropped about 25% against the Aussie in the space of a year (Mar 09 - Mar 10).
Recovering about 8% of that drop in the space of 3 weeks is quite impressive, but I think it just highlights the ongoing volatility and unpredictability of markets in these wierd and wonderful times we live in !

For example, the Oct '08 spike was a 13% leap that lasted exactly 1 month before springing right back to the 2.30ish mark, only to be followed shortly after by a constant downward trend until the recent change in direction...

What goes up must come down, and vice versa....but attempting to predict with accuracy what will occur, rather than simply analysing what has occurred, is nothing other than an amusing hobby.

It's kind of like footing tipping, Just when you think you have it all figured out, the Tigers go and win a game to screw up yer stats

Now that I have written that, it will probably rocket through 1.80 in the coming week just to spite me ;-)

Les Avalook

Osborne seems to want to take over from King as the person to tell the world we are in even bigger poo than anyone thought.

Lets hope they feel the need to stop moaning and do something about it soon.

The Independent also fails to mention with their '£ falls 1% against the euro in a day' that it was at a 18 month high before the fall.

Could in be that with 'Maggie' back in No 10 (briefly) someone will want to sort the mess out.

littda01

Its an interesting ride for sure, with a lot of twists and turns which can obscure the real picture.

IMO the real picture is mostly about the UK economy. As of early 2007 it appeared to be in pretty rude health, as did most of the world. Then the GFC hit and for a while, this was positive for the GBP as investors the world over wet themselves and sought safe havens. At that time, UK was considered one and Aus was considered "risk" because its seen as part of Pacific Rim economy.

Then, the major economies had to bail out their banks. Investors took a look at the UK and said 1) economy very dependant on financial sector, which is now toast 2) UK is actually heavily indebted. Cue GBP slide.

Where we are now, IMO, is that the UK is one of the poorest-placed large economies because its main earner has been thumped (see banks) and it has no real engine to help grow its way out (the US for example, has plenty of that). The huge risk is that by undertaking necessary cuts, the UK's recovery will stall big time. The most optimistic objective forecast seems to be 3-7 years of flatlining.

This is why the GBP is in the toilet and will continue to be for a long time all other things remaining equal (which they never do of course :-), IMO.

So the only way the GBP is going to get back to AUD2 any time soon is if there is a major event (like the Euro crisis, without which the GBP could well be at 1.5-1.6), OR if the AUD turns out to be fundamentally weaker than it appears today.

That could happen, IMO, but would not be related to any Chinese issues, but more likely a downturn caused by an event in the property sector, which seems a very important economic motor in Aus.

wilf70

Very interesting analysis Lillda01--thanks.Don't agree with all of it--think forthcoming chinese downturn will cause Australian substantial downturn[beginning with property].But very interesting;succinct and incisive.Thanks

freebo

Correlate any major stock index, e.g. the Dow, FTSE or Nikkei against GBPAUD (or even more so USDAUD) and you'll see a clear inverse relationship. For a clear example type $XBP:$XAD into www.stockcharts.com, set the range to 3 years and hit update - look at what happened in Oct 08 (when the GFC hit), it will happen again one day. In other words equity markets down means AUD up and vice versa. This is simply because Australia digs stuff up, China makes it into products and the west buys it, any hint of problems in Western economies hits AUD hard.

Its not down to good economic management in Australia or any such hokum, just that Australia has massive natural resources which the China needs in good times when the US & Europe want to buy stuff.

If we have another GFC the AUD will drop, and right now, this month, its looking more likely. It may be delayed for a while but you can't solve a debt crisis by borrowing more money, but this is exactly what the USA, then UK, then (recently) Europe are trying to do. It will end in tears.

I believe in Gold and not paper currency, but its not for everyone.

If you think the GFC is over go ahead & borrow more money, buy a bigger house, car & have a flash holiday on the proceeds, best of luck!

wilf70

freebo agreed--liked your inverse analysis;rather than good management idea

littda01

Assume you mean stock market DOWN, AUD DOWN, In other words, a flight from risk??

Anyways I would not say that the GFC is over as you can probably infer from my post. It says that the big economies are in the tank because of debt, which of course was the debt they needed to take in order to patch the hole the banks created (directly and indirectly). Now that they have that problem, they have to address it with cuts, which will push the weaker economies (like UK) back into the tank. Its a very precarious balance.

You're probably right that you can't fix debt with debt, OTOH you can't solve a GFC through deflationary policies. Govts took the only pill they could swallow which was to postpone the problem, the alternative being people on the streets (see Greece). The US has successfully used this strategy for decades and will do for a few more, but they're in a stronger position than the UK or Europe.

Thats why the UK is screwed, IMO. The debt pills have run out, and the only pills left are the austerity ones. Tough to ignite growth when you're radically tightening belts.

OTOH Australia is in a better position than most, IMO, though a bursting property bubble has a lot of potential to mess things up. If that can be avoided, the strong demand for commodities and general proximity to the strongest region in the world right now should keep the boat floating.

wilf70

The volatile reaction of the pound yesterday[first up then down] was caused,largely by a report by the Fitch Rating Agency on the UK economy--basically saying 'cuts,and deep one's are a must,not an option'.Not sure if any other major factors caused shift

paulry

Sterling gained on US$ and Euro, held firm against AU$ today

littda01

Chinese exports up ~50% year-on-year. AUD bounces on this and strong job numbers.

http://www.reuters.com/article/idUSTOE65904720100610

Looks like people do want Chinese goods after all :-)

Just one set of numbers, I know, but whoever is banking on China falling over probably should take a deeper look. The staggering extent of entrepreneurial activity there was demonstrated again (in a scary way) by the new synthetic drugs coming to the UK to replace the recently-banned Mephedrone.

http://news.sky.com/skynews/Home/Wor...1006215645833?