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That Pesky Pound

That Pesky Pound

Old Mar 5th 2009, 9:45 am
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Default That Pesky Pound

Does anyone have a crystal ball I could borrow please?!

I'm trying to figure out what is going to happen with the Aussie Dollar, but the only conclusion I have come to is it is easier to please the o/h than to get it right!!

Any bright sparks out there with any ideas?

Thanks,

Pete
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Old Mar 5th 2009, 9:54 am
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Default Re: That Pesky Pound

Originally Posted by Aussie_Pete View Post
Does anyone have a crystal ball I could borrow please?!

I'm trying to figure out what is going to happen with the Aussie Dollar, but the only conclusion I have come to is it is easier to please the o/h than to get it right!!

Any bright sparks out there with any ideas?

Thanks,

Pete
Interest rates ar expected to be reduced in the UK again today. This makes sterling less attractive and so in theory it will weaken versus other currencies in the short term. Longer term, well interest rates can go a bit lower but then they only way is up, at which point it will start to regain some strength. How it does against the AUD specifically will depend what is going on in Australia re inflation and interest rates as well of course. But sadly a crystal ball is exactly what you do need if you really want to know. Me, I wouldn't swap my GBP for AUD at this precise moment unless I really had to.
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Old Mar 5th 2009, 10:00 am
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Default Re: That Pesky Pound

Originally Posted by Bermudashorts View Post
Interest rates ar expected to be reduced in the UK again today. This makes sterling less attractive and so in theory it will weaken versus other currencies in the short term. Longer term, well interest rates can go a bit lower but then they only way is up, at which point it will start to regain some strength. How it does against the AUD specifically will depend what is going on in Australia re inflation and interest rates as well of course. But sadly a crystal ball is exactly what you do need if you really want to know. Me, I wouldn't swap my GBP for AUD at this precise moment unless I really had to.
Thanks Bermuda....i guess it's a double edged sword really. The lower interest rates mean my mortgage payments are nice and low, but the Pound is weakening!

Not in a rush to get it sent over, but have been speaking to a few people about my options. Savings aren't really doing anything....the way things are going i'll be paying my bank interest!! Thieves, the lot of them!
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Old Mar 5th 2009, 10:02 am
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Default Re: That Pesky Pound

I was trying to work it out in the opposite direction so thanks for clarifying that for me - it was what I was thinking. I'm off home on holiday and wondered whether to send money today or wait until after the drop in interest rates in UK. Probably going to amount to peanuts but I've waited and hope for the best - although that isnt good news for someone coming out here.
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Old Mar 5th 2009, 10:05 am
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Default Re: That Pesky Pound

For what it's worth i wouldnt expect Sterling to weaken much further the last rate cut had no effect on Sterling as zero interest rates are already priced in so todays expected cut will have no effect in my view. Australia, I believe, is still in denial about how bad its going to get. Traditionally the rate averages out about £1:$2.40 so i certainly wouldnt be exchanging at anything less favourable than that. Once recession really kicks in in Australia and the banks realise that offering 8 times income mortgages probably wasnt sensible the AUD will go a lot lower. As we are seeing in the UK the banks that didnt get involved in all the funny business derivatives stuff are now starting to feel the pain from contraction in the real world economy (eg. HSBC). All in my opinion - but what do I know :-)
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Old Mar 5th 2009, 10:30 am
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Default Re: That Pesky Pound

Originally Posted by Aussie_Pete View Post
Thanks Bermuda....i guess it's a double edged sword really. The lower interest rates mean my mortgage payments are nice and low, but the Pound is weakening!

Not in a rush to get it sent over, but have been speaking to a few people about my options. Savings aren't really doing anything....the way things are going i'll be paying my bank interest!! Thieves, the lot of them!

Yes exactly you gain on one hand and lose on the other, me same. As CaptainMerton pointed out, todays cut might not have any significant impact, if it is expected the money markets would already have adjusted for it. But a rule of thumb, lower interest rates lead to a weakening currency and soon GBP interest rates will not be able to go much lower so...of course what happens in the other country / currency is relevant too.

A low risk practice is to keep assets / liabilities and income / expenses in the same currency. Another reason why I as a risk averse type of person, would not move my savings to AUD right now when I don't need to and am a good year off moving.
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