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?
Pound/euro
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Originally Posted by gallag:
“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?”
“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?”
It's because of the pound going down against the dollar mostly, the Euro is suffering as a result of Brexit too - there are no winners.
Its almost at pre brexit levels now, great news 
Don't care about the USD as we hardly buy anything from there
Don't care about the USD as we hardly buy anything from there
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?
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.
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.
Originally Posted by andersonsonson:
“Its almost at pre brexit levels now, great news
Don't care about the USD as we hardly buy anything from there”
“Its almost at pre brexit levels now, great news
Don't care about the USD as we hardly buy anything from there”
America is our biggest trading partner.
Originally Posted by andersonsonson:
“Its almost at pre brexit levels now, great news
Don't care about the USD as we hardly buy anything from there”
“Its almost at pre brexit levels now, great news
Don't care about the USD as we hardly buy anything from there”
Yeah of course the dollar doesn't affect anything anywhere?
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.
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.
Originally Posted by gallag:
“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?”
“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?”
#9 explains it very well.
Originally Posted by Mr Oleo Strut:
“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.”
“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.”
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.
Originally Posted by gallag:
“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.”
“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.”
I think they'll be more shocks on the horizon but probably not the scale of the few days after the referendum.
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.
Originally Posted by gallag:
“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.”
“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.”
Indeed the previous Governor of the Bank of England had been trying to devalue the pound for ages.
Originally Posted by gallag:
“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?”
“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?”
Lots of the rest of the world's currencies are pegged to the dollar. China is our second biggest source of imports and the US 4th.
And you've got the argument wrong anyway, showing why referenda are a bad idea.
Originally Posted by andersonsonson:
“Its almost at pre brexit levels now, great news
Don't care about the USD as we hardly buy anything from there”
“Its almost at pre brexit levels now, great news
Don't care about the USD as we hardly buy anything from there”
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.
Originally Posted by andykn:
“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.”
“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.”
Trident replacement £205bn? and rising... Mere bagatelle.
Originally Posted by gallag:
“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.”
“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.”
If it was that good an idea everyone would do it.
Originally Posted by jonner101:
“Indeed the previous Governor of the Bank of England had been trying to devalue the pound for ages.”
“Indeed the previous Governor of the Bank of England had been trying to devalue the pound for ages.”
That was when it was 1.70.
Originally Posted by andykn:
“It's below 1.20, pre referendum was 1.30.”
“It's below 1.20, pre referendum was 1.30.”
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.
Originally Posted by gallag:
“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.”
“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.”
So tell the truth. Brexit has resulted in a massive devaluation and increase in poverty in the UK. None of that was necessary.
Originally Posted by Rooks:
“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.”
“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.”
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).
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...
Originally Posted by andersonsonson:
“Its almost at pre brexit levels now, great news
Don't care about the USD as we hardly buy anything from there”
“Its almost at pre brexit levels now, great news
Don't care about the USD as we hardly buy anything from there”
Oil is bought by the barrel in US $
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.
Trade 101.
Originally Posted by andykn:
“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).”
“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).”
But we've also had the sovereign debt crisis, particularly in the Eurozone during the post 2008 period and still the pound was averaging the same value suggesting, to me at least, that traders felt the average £/€ rate of 1.16 was about right. Currencies fluctuate constantly and the movements caused by the Brexit vote have been extreme in the short term but overall it's trading about right.
Originally Posted by andykn:
“It was recovering to more normal levels before people voted to damage our economy.
.”
“It was recovering to more normal levels before people voted to damage our economy.
.”
It had been falling since mid last year, it had a brief 6-week upward movement just before the referendum when the markets predicted stability but that was corrected very quickly (and extremely). If you look at the overall trend it's been downward long before the referendum.
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