US Vs UK Exchange rate for Dummys...... Please!
Discussion
This time last year i took the trip of a lifetime and traveled the whole of the USA and Canada for six months, I spent a bomb but with the exchange rate at almost 2.1 it was fantastic! Now, a year on im planning to return to visit my girlfriend. Checked today and its under 1.5! So what the hell went wrong for us?!
I dont get how 'it' works at all, please could somebody shed a little light on what contributes to a change and what has actually changed!
Thanks, Mitch!
I dont get how 'it' works at all, please could somebody shed a little light on what contributes to a change and what has actually changed!
Thanks, Mitch!
The markets don't like the look of the British economy vs Euro/US/Far east economies so they are selling Sterling & buying other currencies & therefore the value of the currency declines.
Its going to make it doubly interesting (and expensive) when the idiot twosome go looking for where they can borrow the £500,000,000,000 they have said they want to borrow over the next 5 years.
Its going to make it doubly interesting (and expensive) when the idiot twosome go looking for where they can borrow the £500,000,000,000 they have said they want to borrow over the next 5 years.
In a nutshell here it goes. While the US was starting to air it's dirty washing about the problems they faced, their markets took a terrible hit. The fed took very strong action in reducing interest rates and pumping the market with liquidity. They bailed out fannie mae/freddie mac and this kind of calmed the market down a little bit. At this point the $ was taking a pounding and we say $/£ going to over 2.10 and €/$ going to 1.60 and above.
Meanwhile, back in euro-land mr trichet of the ECB is proving stubborn as a mule and held interest rates, he was even so bold to talk about raising interest rates. Everyone thought it was great how bold he was. In the UK, our MPC is full of a bunch of indecisive imbeciles who were too scared to do anything. So they waited and waited, things got really bad and they did nothing. They waited longer and then finally they started cutting rates - but this time it was only about 3 months too late. So now the UK is coming out with data, housing falling, unemployment rising, negative GDP and they're cutting rates and it's doing nothing for the economy. The same for europe, they're slashing rates, consumption falling, GDP flattening, Germany is in big trouble and so on.
So as a result people started pouring their money out of £ and € and sought the haven of the green-back (the $ to you and I) and simple supply and demand took it's effect, coupled in with the growing sentiment and that's why your holiday is going to be about 33% more expensive.
Meanwhile, back in euro-land mr trichet of the ECB is proving stubborn as a mule and held interest rates, he was even so bold to talk about raising interest rates. Everyone thought it was great how bold he was. In the UK, our MPC is full of a bunch of indecisive imbeciles who were too scared to do anything. So they waited and waited, things got really bad and they did nothing. They waited longer and then finally they started cutting rates - but this time it was only about 3 months too late. So now the UK is coming out with data, housing falling, unemployment rising, negative GDP and they're cutting rates and it's doing nothing for the economy. The same for europe, they're slashing rates, consumption falling, GDP flattening, Germany is in big trouble and so on.
So as a result people started pouring their money out of £ and € and sought the haven of the green-back (the $ to you and I) and simple supply and demand took it's effect, coupled in with the growing sentiment and that's why your holiday is going to be about 33% more expensive.
Edited by g4ry13 on Friday 12th December 00:50
If you mean how does the mechanism work then:
if you have a fixed amount of something and you try and sell it to an ever decreasing number of buyers you have to lower the price. This is the pound in this example
If you have a fixed aount of something similar that people want then you can raise the price. This is the dollar/euro in this example.
Think of it as £1 buys you a pint and half when beer is popular but 2.5 pints when it isn't popular.
if you have a fixed amount of something and you try and sell it to an ever decreasing number of buyers you have to lower the price. This is the pound in this example
If you have a fixed aount of something similar that people want then you can raise the price. This is the dollar/euro in this example.
Think of it as £1 buys you a pint and half when beer is popular but 2.5 pints when it isn't popular.
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