Re: Exchange rate
 

I read a piece in one of the papers (Telegraph?) a few weks back that said a weak pound was central to the Bank of England's plan for recovery. So while I'm desparate to see $2=1GBP again, I think that policy will dictate that it's not going to happen in the near future, and Mervyn talks it down as much as he can for that reason.

It makes no sense to me though at it was 1.90 at the end of June and only 1.74 today. The outlook for the UK looks better now than it did then, with house price rises sustained and just about every economic indicator up except unemployment, which is in any case a lagging indicator.

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The pound isn't doing too badly against the USD.... I think the CAD is temporarily strong on the back of high gold / oil... if they drop (which they could!) so will the CAD.

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If it hits $1.50 I'll sell up and move the money back to the UK :)

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Not a bad idea.... sounds like the Mother Country needs its expats back!

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The outlook in the UK looks better because the government has the money printing presses on full steam ahead once they realise which is just starting to happen that this money will have to be repaid sterling is toast along with the US$ wake up and get your head out of the sand.
http://news.sky.com/skynews/Home/Bus...Borrowed_16_Bi
http://business.timesonline.co.uk/to...cle6839660.ece
http://www.debtbombshell.com/
http://uk.biz.yahoo.com/18092009/325...sses-july.html
http://uk.biz.yahoo.com/18092009/325...sses-july.html

Re: Exchange rate
 

Well said. Economic recovery my ar5e! All of the so called feel good stuff has come from government bail out money, which will soon have to stop and then will need to be paid back. House price increases are on tiny volumes and won't be sustained into the winter. I would expect a long grind to the bottom, with a total peak to trough fall in excess of 40%, with yearly blips upwards, heralded as a recovery. Unemployment may well exceed 3.5 million in the official figures by the time the government has culled from the public sector, and whilst I suspect there will be a w, with further economic declines in GDP next year, even after the decline bottoms out, growth will be extremely slow for as long as 5-10 years after the mess that has been left behind has been cleared up. It may be longer if the city is replaced by another commercial centre as the global financial capital (which is very likely if the EU have their way).

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800 Billion and growing daily. 800 Billion and growing daily that’s a truly frightening figure.
Don’t get me wrong I love the UK still and still consider it as home but the UK Governments have sold out to the Banks and financial institutions. I am glad my kids have the chance to live and work in Canada.

When we came over we had $2.46 to the pound can’t see it getting back to that for a coup[le of decades.

It's a truly frightening figure. Why is the world's 6th richest country so deeply in debt?

Every year the UK runs a large budget deficit. The Government spends more money than it can tax, so we plug the gap by selling bonds to investors at home and abroad. These bonds - known as gilts - have to be repaid in full, with interest. Added together, our unpaid loans make up the UK's national debt.

Right now, that debt is growing violently. The Government forecasts it will soar to an eye-watering £1.1 trillion by 2011. To put that in perspective, the UK went bust in 1976 running a budget deficit of 6% of GDP. In 2009 that deficit is going to top 12%.

Historically, our debt burden was heavier after World War II. But like any loan, if the money isn't invested wisely we end up borrowing even more. When the Government runs up huge debts and produces nothing to show for it, we're the ones that shoulder the burden. In 2009 that burden will grow by £241.6 billion.

The state has been wasting our money for decades. Weak politicians have bribed voters with endless amounts of borrowed cash. As a result, by 2010 the interest on the national debt will cost £42.9 billion a year. That's more than we spend on defence, and not much less than the entire education budget.

Future generations won't thank us for mortgaging their future. At best, national debt will be a millstone round our children's necks. But if lenders lose faith in Britain there could be profound consequences for our currency, our country and our lives.

Your share of the bill

We owe £13,126 for every man, woman and child

Households will be taxed £1,212 this year, just to cover the interest

To pay it off, the average worker will be docked 59 weeks wages

Re: Exchange rate
 

Thanks for the advice but I haven't got my 'head in the sand'.

I'm trying to convert a lump of money into C$ and if you follow the FX rates you'll see that they're extremely volatile, and react to various economic indicators on a daily basis. Like many people on here, I am not in a position to buy all of the C$ I need immediately, and so the outlook for sterling over the next 6-12 months is much more important to me than what's going to happen over the coming decade.

My post was about the volatility of sterling over the last 10 months.

If you're going to take the trouble to reply to a post, why don't you make a comment that responds to the points raised rather than trying to be offensive?

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Well you are rather touchy head in the sand an insult don’t think so more of an observation your quote was telling us that the UK economy is recovering

The outlook for the UK looks better now than it did then, with house price rises sustained and just about every economic indicator up except unemployment, which is in any case a lagging indicator.

My post and links suggest otherwise.
If you think anyone on these forums can tell you where sterling will be in relation to the Canadian dollar in 6-12 months time your dreaming, if they knew that they would be worth a fortune in my humble opinion the pound and US dollar has a long way to slide yet, as all that debt has to be re paid at sometime. Remember at the moment they are buying their own debt through the bond markets.
I still myself have a considerable amount of investments in the UK so would love sterling to get back to $2.50 sometime soon but can’t see it happening.
This is a quote from experts from the Daily Telegraph
Pound 'will fall to parity with euro'

Sterling weakened yesterday to close at just over 90p to the euro for the first time in four months, amid renewed concern over the state of the British banking system.

By Angela Monaghan
Published: 8:36PM BST 18 Sep 2009

The low came as currency experts predicted the pound would fall further and reach parity with the euro within the first three months of 2010. One euro was worth as much as 90.36p, the highest level close since May 11. A year ago a euro would only buy 79p.

Confidence about the UK currency was eroded when issues surrounding Lloyds Banking Group's participation in the asset protection scheme once again put the spotlight on Britain's financial system, highlighting the problems that remain.

Currency strategists at BNP Paribas suggested sterling's weakness was not just a short-term blip because sterling would be dragged down by ongoing loose monetary conditions in the UK, relative to the eurozone.

"Sterling is likely be the underperformer among the majors, despite a favourable global financial market environment, as the UK domestic picture is set to deteriorate, with the fiscal/monetary policy mix in particular working against sterling," they said in a note............
Link http://www.telegraph.co.uk/finance/c...with-euro.html

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Of course I don't think that anyone on these forums can tell me where sterling will be. In fact I know that no-one anywhere can tell me that, all the way up to Mervyn King. I'm just interested in people's opinions.
I quite agree. But the fact remains that sterling did get back to 1.90, briefly, a few months back. That could happen again, even if there is no sustained recovery for years to come.

I'm mystified as to why some posters on here suggest that it could reach $1.50. Where does that figure come from?

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I don't think it will get that low myself. But debt levels and money printing could do it. Remember, it's not so long ago that it was over 2 and it's only the same drop repeated - it's unlikely, but no way impossible. Ask yourself what do you think will happen if oil goes back up to $150/barrel again?

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That's true, but a realistic possibility in the foreseeable future? I looked at some historical figures, and GBP is already very low against the CAD in historical terms.

It did dip to 1.47 at one point in the early 80s, but even then it was only below 1.70 for a period of about 9 months.

That said, I have absolutely no idea whether historical performance has any relevance whatsoever. Probably not.

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There is a possibility though that in 12 to 18 months the UK will have to Jack up interest rates to levels not seen for decades to help pay down government debt, this may change sentiment in the fx markets and sterling would appreciate against other currencies. But who knows the markets often go in unpredictable directions.
When we came over four years ago I took some professional advice of so called fx experts that turned out completely wrong lucky enough I ignored it.
The weakness in sterling is down to greedy bankers and an inept government and unfortunately the tax payers in the UK will be paying for it for a long time.

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Er, it was 2.40ish a couple of years ago, its now only just above 1.70...I'd guess you'd probably have said the same then about $1.70, you are obviously not brilliant at horizon scanning. Just the loss we have seen since August repeated would bring us close to $1.50. The banks etc are just starting to get their head round how deeply messed up the UK economy is. Canada is in nowhere near such a mess. Also with Brown and Darling in charge, I really think a run on the pound is likely before the next election. If all your money is in sterling, you could do worse than convert half now just to cover your arse (I did that at $1.80). If you are in property, I'd take the next offer you get, as IMO we are about to head into the second leg down, equities too. The fundmentals facing the post money printing economy are terrible, and nothing like we have seen in our lifetimes. The UK is not going to feel a happy place for many years.

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I moved 9 months ago, and staged my fx 9-10 months ago. I got $1.74 - $1.80, averaging out to about $1.77. I have been surprised at the lack of volatility in the meantime. Apart from that $1.90 blip, I've seen very little movement. $2+ is ancient history, and yearning for it to return is like still complaining about decimalisation!

It seems to me that GBP:USD is key, because Canada manipulates CAD:USD as best it can to maintain the trading relationship. All the GBP:CAD movements have been traceable to economic announcements in UK and US as far as I can tell.

Canada needs to keep its currency cheap against the USD, so when I see GBP:CAD deteriorating when GBP:USD isn't, I don't tend to worry too much.

'Expert' comments welcome....