Pound in freefall against dollar

lostinrates

Generali wrote: »

House prices are related to the strength of the general economy so this isn't completely OT. Also, I suspect that MSE sees this as a bit of a nutters board and pretty much leaves it alone as loads of stuff on here is miles OT and would probably be moved on other boards.

I agree about the OT...and we can all be very silly here...BUT, I can't view my (future)house as a stand alone thing but rather as part of my expenditure/assets/liabilities as a whole. When asking a question the split fora is obviously sensible...in answering them or discussion even or the strictest on toic soul there has to be an acknowlegdment of influencing factors? As a woman and a non-financial expert my route might be less direct than a financially literate bod, but that's what lots of the arguements here boil down to....house vs home...life versus investment vehicle and the point at which these two things have become interconnected for us as individuals and society.

While I try to look at things with a clear mind a house (along with all our savings and expenditures) for me is a mixture of trying to be sensible and the ins and outs of life. I can't think of where I'd live without how I'd live there.:o

StevieJ

alared wrote: »

I said by "at least .5%".
I tend to agree with Epz,that they should increase by a lot more but there`s no way the government would allow this,plus the BoE hasn`t the nerve.
Please don`t tell me the BoE is independant and has been for the last 12 years.

Low interest rates and cheap money is the cause of all the problems NOW.
Low interest rates = high house prices and visa versa.

I thought house prices were falling, are you saying that WHEN the BOE drop interest rates by 2% that house prices will go straight back up again? It didn't seem to work that way when they dropped them to 5%.

justpurchased

alared wrote: »

I said by "at least .5%".
I tend to agree with Epz,that they should increase by a lot more but there`s no way the government would allow this,plus the BoE hasn`t the nerve.
Please don`t tell me the BoE is independant and has been for the last 12 years.

Low interest rates and cheap money is the cause of all the problems NOW.
Low interest rates = high house prices and visa versa.

Belive it or not the intrest rate is not just about mortgages!
The BOE are more responsible to business than home owners. I think your view is based about your own personal circumstances (you want a cheap house) and not about the economy whatsoever.

WTF?_2

One of the factors that the central bank has to take into account when setting interest rates is currency shifts.

(Interest rates certainly seem to be a factor that house buyers and sellers are worried about or do the nit-pickers want to debate that too?)

The stated goal of the MPC is to control CPI. Given that just about everything these days is imported (including our inflation, apparently :rolleyes:) then a sliding currency means more inflation.


So a plummeting currency is something that anyone who is thinking "what way will interest rates go" when discussing the future direction of the housing market, should take into account.


Anyone who doesn't want to get into discussion of such stuff as general economics, interest rates, money supply, the markets and exchange rates doesn't have to read the threads. But those things certainly have an impact on the price of houses.

WTF?_2

chucky wrote: »

Again... what does this have to do with House Prices or even House Buying, Renting & Selling???

Of course economics are factors with house prices but this is a House Prices forum - not a forum on "General Economics" or !!!!!!'s only personal arena to quote any negative economic data he can find in the media...

Why don't you have a quiet chat with Martin and see if he'll give you your own board that you can manage and you call it general Economics.

The moderators should really move this post and probably most of !!!!!!'s posts to a more suitable forum.

As to the relevance of the post, I just explained in my reply.

Do me the courtesy of reading it and yourself the courtesy of not coming over like a bitter troll.

justpurchased

!!!!!! Just out of intrest (as we have talked about this before)
Do you think our currency or oil as a greater effect on our inflation?

WTF?_2

justpurchased wrote: »

!!!!!! Just out of intrest (as we have talked about this before)
Do you think our currency or oil as a greater effect on our inflation?

The plummeting pound is negating a lot of the upside from oil falling back from the highs of recent months to simply "bloody expensive".

If you were in the US for example, you'd see the full benefit of falling oil prices.

We on the other hand will not because sterling is weakening against the dollar.

People in the Eurozone will see more benefits than us because the Euro hasn't weakened anything like as much as the pound (yet....).


If the BoE were thinking of cutting rates next time around, they'll have to take the inflationary consequences of a weaker sterling into account. Oil isn't going to go down in dollar prices just because sterling weakens due to interest rate cuts.

justpurchased

!!!!!!? wrote: »

The plummeting pound is negating a lot of the upside from oil falling back from the highs of recent months to simply "bloody expensive".

If you were in the US for example, you'd see the full benefit of falling oil prices.

We on the other hand will not because sterling is weakening against the dollar.

People in the Eurozone will see more benefits than us because the Euro hasn't weakened anything like as much as the pound (yet....).
.

Exactly we produce not a jot (vitualy) so the cost of goods produced in the US and europe will come down because of the cheaper oil. cheaper goods equals lower inflation, perhaps we will not see the full benefit but inflation will fall.

WTF?_2

justpurchased wrote: »

Exactly we produce not a jot (vitualy) so the cost of goods produced in the US and europe will come down because of the cheaper oil. cheaper goods equals lower inflation, perhaps we will not see the full benefit but inflation will fall.

I don't think you're getting the point.

Weaker pound = imports cost more = higher prices = higher CPI = upward pressure on interest rates=whining bulls.

Cheaper oil might feed through as a downside pressure on inflation but a weakening pound means higher prices than there would otherwise have been on anything imported.

justpurchased

!!!!!!? wrote: »

I don't think you're getting the point.

Weaker pound = imports cost more = higher prices = higher CPI = upward pressure on interest rates=whining bulls.

Cheaper oil might feed through as a downside pressure on inflation but a weakening pound means higher prices than there would otherwise have been on anything imported.

I do mate, you fail to see that the recent jump in inflation as been down to energy prices. We will not see a full drop due to the weak pound but inflation will start to drop (especialy when the $ starts to slide again). You just don't like the fact that inflation will drop as your are hopeing for and interest rate increase.