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Pound/euro |
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#1 |
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Forum Member
Join Date: Jul 2015
Posts: 276
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Pound/euro
Can anyone explane to me why every media outlet today is ranting about inflation (still well below the 2% target for a healthy economy) due to the pound "crashing" against the euro? The pound stands @€1.20 today, about €0.05 down on its average, also it's been down under €1.15 on many occasions in the past few years so help me understand why this is so devastating?
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#2 |
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Join Date: Jan 2003
Location: London SW6
Posts: 37,482
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Quote:
Can anyone explane to me why every media outlet today is ranting about inflation (still well below the 2% target for a healthy economy) due to the pound "crashing" against the euro? The pound stands @€1.20 today, about €0.05 down on its average, also it's been down under €1.15 on many occasions in the past few years so help me understand why this is so devastating?
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#3 |
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Join Date: Dec 2008
Posts: 6,215
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Its almost at pre brexit levels now, great news
![]() Don't care about the USD as we hardly buy anything from there |
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#4 |
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Join Date: Jul 2015
Posts: 276
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But...... I thought the argument was, we hardly trade with America, Trump being very pro British and a potential deal with America therfore is irrelevant, we do tons of trade with Europe, that's the super duper important market so surly the GBPEUR is far more important than GBPUSD?
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#5 |
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Join Date: Jan 2014
Posts: 2,311
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Yes the pound crashed after the referendum, but has stabilized because nothing has been done to implement Brexit. Furthermore many export and service receipts are paid in foreign currencies giving a temporary lift to the UK, but that wil not continue as the Brexit negotiations progress. In the meantime UK shop prices are going up due to the heavy dependency on imports. Inflation and interest rates will follow. It's going to be a rocky roller-coaster of a ride and there will be tears. Better get some tissues in.
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#6 |
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Join Date: Jul 2015
Posts: 276
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Just to be consistent and head of the predictable argument is actually do not want the pound to go much above the €1.20 rate, if people give it time a devalued pound will help diversify our economy and make it more manufacturing/export driven.
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#7 |
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Forum Member
Join Date: Mar 2007
Location: Hampshire
Posts: 20,806
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Quote:
Its almost at pre brexit levels now, great news
![]() Don't care about the USD as we hardly buy anything from there |
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#8 |
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Join Date: Oct 2010
Posts: 6,231
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Quote:
Its almost at pre brexit levels now, great news
![]() Don't care about the USD as we hardly buy anything from there |
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#9 |
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Forum Member
Join Date: Apr 2014
Posts: 10,592
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The pound has crashed against dollar. ALL commodities are traded in dollars. Oil / Gas / Wheat / Soya Bean / Cotton / Precious Metals / Corn / Cocoa / Sugar / Coffee / Rice.
Pound was at 1.47 prior to vote. It's currently at 1.27. It was at 1.60 back end of last year and as low as 1.21 immediately after Tory Conference. 1.60 was too high but the threat of Brexit brought it down to reasonable level. Anyone who has travelled to US over 'many' years knows 1.50 (ish) is the norm. 1.21 was due to talk of hard brexit. Talk has since softened. So all those goods are circa 13% more expensive than they were prior to vote. Even more so in October / November due to rhetoric at Tory Conference. Public have been shaded from the real impact as many producers 'hedged' the pound around the Brexit vote. In other words they fixed the rate like we do with our heating bills. Some for 3 months. Some for 6 months. That is why everyone knows the real hit comes in New Year. As for Euro the only folks who seem to obsess about it are Brexiteers. Oh the irony. |
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#10 |
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Forum Member
Join Date: Aug 2014
Location: Stirling/Windsor/Overseas
Posts: 14,338
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Quote:
But...... I thought the argument was, we hardly trade with America, Trump being very pro British and a potential deal with America therfore is irrelevant, we do tons of trade with Europe, that's the super duper important market so surly the GBPEUR is far more important than GBPUSD?
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#11 |
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Forum Member
Join Date: Jul 2015
Posts: 276
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Quote:
Yes the pound crashed after the referendum, but has stabilized because nothing has been done to implement Brexit. Furthermore many export and service receipts are paid in foreign currencies giving a temporary lift to the UK, but that wil not continue as the Brexit negotiations progress. In the meantime UK shop prices are going up due to the heavy dependency on imports. Inflation and interest rates will follow. It's going to be a rocky roller-coaster of a ride and there will be tears. Better get some tissues in.
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#12 |
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Forum Member
Join Date: Apr 2004
Posts: 5,887
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Quote:
Nothing except parliament agreeing article 50 will be signed first quarter 2017, the markets price these things in in advance, Brexit was a shock and the market reacted as such, there will now be no more massive shifts over Brexit, the main factors to affect GBPEUR over the next year will all be European risks with many governmental elections etc.
One of my clients export and import heavily to and from the Eurozone and they've always told me that the 1.2-1.3 Euros to the pound is about right for them. Above 1.3 and they find sales drop whilst below 1.2 results in lower margins on an already low margin business. So I think we are approaching the right exchange rate for the Euro again. The $ is a different beast. Traditionally the $/£ exchange rate is best around the $1.5 to the pound but the dollar is very strong at the moment so I don't expect a full recovery to $1.5. That said, the "flash crash" artificially weakened the pound further than it probably should have been and it probably would now be trading around the £1.33 if not for that event. Even if we'd voted to remain, I suspect the $/£ rate would be around the $1.4 to the pound rather than the highs of a year ago. And that wouldn't have been newsworthy. |
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#13 |
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Forum Member
Join Date: Apr 2008
Posts: 3,153
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Quote:
Just to be consistent and head of the predictable argument is actually do not want the pound to go much above the €1.20 rate, if people give it time a devalued pound will help diversify our economy and make it more manufacturing/export driven.
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#14 |
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Forum Member
Join Date: Jan 2003
Location: London SW6
Posts: 37,482
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Quote:
But...... I thought the argument was, we hardly trade with America, Trump being very pro British and a potential deal with America therfore is irrelevant, we do tons of trade with Europe, that's the super duper important market so surly the GBPEUR is far more important than GBPUSD?
And you've got the argument wrong anyway, showing why referenda are a bad idea. |
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#15 |
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Forum Member
Join Date: Jan 2003
Location: London SW6
Posts: 37,482
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Quote:
Its almost at pre brexit levels now, great news
![]() Don't care about the USD as we hardly buy anything from there The US is our 4th biggest import source, nearly 50 billion dollars a year of goods. Please research a little better next time before you vote. |
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#16 |
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Join Date: Aug 2006
Location: East Midlands
Posts: 5,005
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It's below 1.20, pre referendum was 1.30.
The US is our 4th biggest import source, nearly 50 billion dollars a year of goods. Please research a little better next time before you vote. |
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#17 |
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Forum Member
Join Date: Jan 2003
Location: London SW6
Posts: 37,482
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Quote:
Just to be consistent and head of the predictable argument is actually do not want the pound to go much above the €1.20 rate, if people give it time a devalued pound will help diversify our economy and make it more manufacturing/export driven.
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#18 |
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Forum Member
Join Date: Jan 2003
Location: London SW6
Posts: 37,482
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Indeed the previous Governor of the Bank of England had been trying to devalue the pound for ages.
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#19 |
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Join Date: Apr 2004
Posts: 5,887
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Quote:
It's below 1.20, pre referendum was 1.30.
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#20 |
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Forum Member
Join Date: Jan 2014
Posts: 2,311
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Quote:
Just to be consistent and head of the predictable argument is actually do not want the pound to go much above the €1.20 rate, if people give it time a devalued pound will help diversify our economy and make it more manufacturing/export driven.
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#21 |
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Forum Member
Join Date: Jan 2003
Location: London SW6
Posts: 37,482
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Quote:
Between 2008 and 2014 the rate was averaging around the 1.16 mark. The 18 months before the referendum had the £ at an unusually strong position against the €. The current £/€ exchange rate is nothing unusual and we wouldn't even be discussing it if there hadn't been a referendum.
It was recovering to more normal levels before people voted to damage our economy. Of course, if we'd joined the Euro at start at around 1.60/1.70... |
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#22 |
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Forum Member
Join Date: Dec 2016
Location: London Town
Posts: 147
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Quote:
Its almost at pre brexit levels now, great news
![]() Don't care about the USD as we hardly buy anything from there |
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#23 |
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Forum Member
Join Date: Oct 2015
Posts: 3,660
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Everything we buy from Asia, the US, Canada, the Middle East, Japan and most of Africa and South America is traded in dollars.
Trade 101. |
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#24 |
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Forum Member
Join Date: Sep 2003
Location: Devon
Posts: 47,995
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The simple answer to the OP's question is that is what the media does these days.
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#25 |
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Forum Member
Join Date: Apr 2004
Posts: 5,887
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Post 2008 was unusual as our banks and economy was worse hit by the global financial crisis than the EU (at least that's what the Alt-DS-right told us repeatedly all those years).
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It was recovering to more normal levels before people voted to damage our economy.
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