YankeemovingAbroad

There are historic trends that say the dollar will rise under a democratic president.Happen under Clinton,Carter,Kennedy and Johnson.The British government will have to borrow and spend money in order to deal with the current financial crisis.Greater national debt will lower the value of the British pound.

The Dollar has risen in the last two months against all other foreign currencies despite our borrowing money to fight off recession complications.Are we looking at the possibility that the dollar will come close to equal value of the pound? Pound thus far has seen a 20% devaluation and today is now below a 1Pd=$1.50 exchange and still heading south. I'm hoping so because that would make house hunting in the UK a lot more fun

Ray

Its been there before

frrussre

I remember it @ $1.03 to the pound.
Reg. Frank R.


Interesting page:
http://www.miketodd.net/encyc/dollhist.htm

RoadWarriorFromLP

You really need to learn more about exchange rates. They are indifferent to the political affiliation of the president, and your summary is flawed on a number of levels.

Sterling-dollar parity is highly unlikely. The enormous and soaring US budget deficit make the dollar fundamentally weak; it is currently strong relative to everything but the yen only because Europe and other western countries are in even worse shape at the moment than the US.

I'm not sure how you expect to get a mortgage in the UK. The British banking system is suffering from the same problems that the US is, and median housing prices in the UK are substantially higher.

dunroving

Closest it's been to parity in the last 37 years is in the mid-80's:

http://research.stlouisfed.org/fred2/data/EXUSUK.txt

vegas

The budget deficit will be larger in the UK as a proportion of GDP than in the US. This will have a major impact on the currency and parity is a real possibility.

franc111s

Mmm, I think we might not see it fall much further and maybe even come back a little.

My reasoning is MORE because I don't think we have uncovered but a fraction of the fraud on Wall Street.

I think we are looking at a bigger collapse in the USA and I think the UK may just weather it better. Certainly EURO interest rates are too high and will have to come down but I can see US rates getting to zero and Obama spending even more than Brown!

Scary times still ahead.. IMHO.

Of course, I don't have a crystal ball and the USD$ is still seen as the w/wide currency. That could change and is changing but just not yet.. Still, i see a Depression, not recession!

YankeemovingAbroad

I plan to write a check to pay for the UK property.As a mortgage broker I would never want to have a loan on realestate if I could avoid doing so.You might want to check the currency historical charts.The republicans are famous for wanting to keep the value of the dollar as low as possible in order to encourage a free trade enviroment.Dem admin tend to be less in favor of artifiscially influencing the greenback.The dollar allthough weakened is still the worlds main currency.To think it can't be adjusted based on currency policy would be surprising to many investors.

YankeemovingAbroad

That is what I'm thinking as well.I'd be perfectly happy for the pound to go up right after I buy my UK vacation home

I think if the pound does become near equal to the dollar I believe it will happen in mid 2009

RoadWarriorFromLP

Argh. Without indulging in too much of a history lesson, a few things --

-Between the end of WWII and the early 70's, during the Johnson and Kennedy administrations, Bretton Woods dollar pegging was still in effect. Currencies did not really float then as they do today.

-The pound has spent decades declining in comparison to the dollar, because the pound was once the world's reserve currency, just as the dollar is today, so the pound had a long way to fall. Even a strong pound today is weak compared to what it once was; when the sterling was the reserve currency, one pound was equal to about five dollars.

-As most of us know, there are other currencies aside from the US dollar and the pound. The long term trend of the US dollar against the yen and the former D-mark, for example, has been for the dollar to weaken, the opposite of what it is doing with the pound. These countries were in a reverse situation to the sterling -- they were based in countries battered by war, so their economic revival caused their currencies to strengthen.

-Governments and US presidents have limited ability to manipulate their exchange rates. The free market ultimately determines what it thinks of a currency's value, based upon a variety of factors. The US dollar is a unique animal due to its reserve status, and a primary determinant of the dollar's value is the US federal budget deficit. If you want to find historical correlation, that's the most consistent factor that you'll probably find.

The US is currently in an unusual situation, in which the dollar should be declining because of the now-soaring deficit, but has in fact strengthened in the short run because the rest of the world is scared s**tless and is in such horrible shape that it is in search of a hedge. That suggests to me that when things calm down a bit that the dollar will weaken somewhat, for as fear diminishes, demand for hedging should fall accordingly. Obama cannot simply snap his fingers and make the deficit disappear, and the market will render its judgment with little regard for his party.

Xebedee

Think its possible that when the dust finally settles, the Dollar gets rejected as the world's reserve currency?
Reason being, that the rest of the world just won't allow the US to spark another world-wide downturn in the future?

Asking because this stuff is like Greek to me - just like conspiracy theory stuff.

Mallory

This article was written exactly one year ago. How quickly things can change!

http://www.telegraph.co.uk/finance/p...ak-dollar.html

Big D

Could I ask why - apart from the sentiment of not wanting to have any debt?

snowbunny

I'd personally love parity (I am thinking of shopping and travelling) but think 1.60 USD = 1.00 GBP is more realistic.

englishinfl

Isn't it what everyone in their right mind would want to aspire to?
Apart from the debt, the principle sum borrowed is paid back many times, and carries on over 25 years.
Cut your mortgage payments out and you have that extra money in your pocket each month to invest to make money, and help your retirement plan.
It's simple enough. Living debt free costs less.