Why is the pound falling against the dollar at the moment?
Discussion
Before the election the pound was low/mid $1.50 with analysts predicting a rise once the election was over.
We have a Conservative led government who are starting to cut spending which should strengthen the £, but it is now $1.43 and falling.
Why and what are peoples predictions for when it will recover?
We have a Conservative led government who are starting to cut spending which should strengthen the £, but it is now $1.43 and falling.
Why and what are peoples predictions for when it will recover?
Guam said:
I believe this is deliberate policy on the part of the treasury team to allow the Pound to sink, it generates increased revenues for the exchequer on imports reduces the cost of exports (relatively) although how many people are exporting who the heck really knows now. Along with letting inflation run I believe its part of the means to reduce the ACTUAL costs to the country of the debt.
You don't think the Yanks (and everyone else) is trying the same stunt? It's a race to the bottom!
Yeah problem is the USD is the global reserve currency and their economic stats are a little better currently.
Euro uncertainty means some are racing to the USD to preserve value.
Race to the bottom it is. Greece is bound to default sooner or later. There is no way they can pay their debt off. Hundreds of thousands are taking early retirement to cash in now on the generous deal and the same number of younger people are fleeing the rising tax grab.
My 2p
Euro uncertainty means some are racing to the USD to preserve value.
Race to the bottom it is. Greece is bound to default sooner or later. There is no way they can pay their debt off. Hundreds of thousands are taking early retirement to cash in now on the generous deal and the same number of younger people are fleeing the rising tax grab.
My 2p
summit7 said:
We have a Conservative led government who are starting to cut spending which should strengthen the £, but it is now $1.43 and falling.
They are cutting $6b.This year's defecit = £170b (IIRC??)
Current debt £900b
Forecast debt £1400b
So, they aren't really doing much at all. In the grand scheme of things, £6b is the square root of sod all. The markets are reacting accordingly.
They need to announce another £20b of cuts in the budget, or the IMF will be here in October.
The dreadful irony. We voted to get rid of Gordon, but he already had his application in to be head of the IMF, thus guaranteeing that he will be running the country once more.
Don
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Edited by don4l on Monday 24th May 17:04
don4l said:
The dreadful irony. We voted to get rid of Gordon, but he already had his application in to be head of the IMF, thus guaranteeing that he will be running the country once more.
Don
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Edited by don4l on Monday 24th May 17:04
The Hypno-Toad said:
don4l said:
The dreadful irony. We voted to get rid of Gordon, but he already had his application in to be head of the IMF, thus guaranteeing that he will be running the country once more.
Don
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Edited by don4l on Monday 24th May 17:04
k-up.Here's the new logo:
Marf said:
don4l said:
They need to announce another £20b of cuts in the budget, or the IMF will be here in October.
Why specifically October?The markets operate in a serial fashion. Early in the "financial crisis" it was clear that nearly all the banks were in deep trouble. Oddly, their share prices collapsed one by one. Any sane person could see that they were all going to take a tumble, but the markets wrote them down one at a time.
The IMF will be called in when the government is unable to borrow money. It has been clear for at least a year that the UK government's spending plans are unsustainable. We are already using 40% of income tax receipts to pay interest on loans. This is due to rise to 70% in the next 2-3 years. Clearly, we will not be able to meet these interest payments, yet alone pay off the capital. Under these circumstances nobody will buy British bonds.
Forgive me if the avove was already clear.
"The markets" gave the UK some time because there was a general election coming. If Labour had won, then the UK would have become the next country to see its GILT market hit.
As it is, the running order remains the same. Greece has already come to the fore. Spain is next. After that, it is probably Portugal's turn. Ireland may get ignored, and then it is the UK's turn. My gut feeling is that this could happen by October.
There are a couple of flies in the ointment. One is the recent trillion dollar package announced by the Eurozone. This is a big problem because it only makes things worse in the long term. It gives the PIIGS a two year breathing space, and means that they don't have to make such drasitc cuts immediately. What on Earth are they going to do in two years time? I cannot see that another trillion will be forthcoming.
I suspect that the Germans and French know that this package cannot work in the long term. As such, it is a mechanism to buy time so that some countries can make an orderly withdrawal from the Euro. I have no idea about the timetable, if it even exists.
So, my October date is a guess. If more than £20b reduction in spending is announced in the budget, then I think that the markets will relax - for a year.
Don
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Fittster said:
Jimbeaux said:
Fittster said:
When investors start thinking about the state of the US books.
Good ole' Fitt; never misses a chance to slam those mean, bad Yanks.....never. 
Don
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The strength of Goldman Sachs is in part responsible.
Don't confuse the state of the US nation as it is at the present with where it will be in the near future, you're looking at the wrong aspect.
Quietly the US gov. is pushing internal investment, the money will come from the likes of GS and people know this, we have not addressed this [yet] in the UK, because that vile Mr. Brown didn't go to the polls soon enough, but when and if we adopt the subtle changes to internal investment over the few months then the £ is a good 6 month buy now.
Buy soon at 1.40, sell for 1.55 - 1.60 in nov/dec. GS will be doing that soon if not done already.
Don't confuse the state of the US nation as it is at the present with where it will be in the near future, you're looking at the wrong aspect.
Quietly the US gov. is pushing internal investment, the money will come from the likes of GS and people know this, we have not addressed this [yet] in the UK, because that vile Mr. Brown didn't go to the polls soon enough, but when and if we adopt the subtle changes to internal investment over the few months then the £ is a good 6 month buy now.
Buy soon at 1.40, sell for 1.55 - 1.60 in nov/dec. GS will be doing that soon if not done already.
Most governments hold significant amounts of dollars and it makes up to two thirds of most nations foriegn currency reserves - whereas the average country holds sterling at about 4% of foriegn reserves... more reading here: http://www.imf.org/external/np/sta/cofer/eng/index...
Also many businesses trade in dollars - nearly half UK companies report in dollars, so it's a currency that seems a little more robust than many others...we have incentivised our customers to pay us in USD rather than euro or £'s where we can.
Also many businesses trade in dollars - nearly half UK companies report in dollars, so it's a currency that seems a little more robust than many others...we have incentivised our customers to pay us in USD rather than euro or £'s where we can.
Guam said:
Dont think this is a repost, surprised the PH Massive missed this if it isnt 
Looks like Germany are preparing for the inevitable!!
http://www.express.co.uk/posts/view/176668/Germany...
Time to dump your Euro holdings according to one commentator on there!!
Cheers
Tom
Well, I hinted at this just four posts up^^^^.Looks like Germany are preparing for the inevitable!!
http://www.express.co.uk/posts/view/176668/Germany...
Time to dump your Euro holdings according to one commentator on there!!
Cheers
Tom
Don
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Fittster said:
Jimbeaux said:
Fittster said:
When investors start thinking about the state of the US books.
Good ole' Fitt; never misses a chance to slam those mean, bad Yanks.....never. Edited by Jimbeaux on Tuesday 25th May 12:56
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