How far will Sterling be allowed to fall?

SGE1

Heyman wrote: »

I know that inflation/deflation has been discussed here a lot, but would it be fair to say that the current devaluation of the pound that we're seeing, if sustained, will see inflation start to rise?

There could be - it would be imported inflation though, as imports become more expensive. It's hard to tell. Though if that happens, then the BoE will be forced to raise interest rates, which should mean the value of the pound rises. The side of me that has a loan in euros like that. The side of me that wants to get a mortgage doesn't.

These things are generally zero sum games, there are always winners and losers from it all.

handful

That takes it back to my original point. If Sterling is to be left abandoned until such point that it becomes inflationary, how low will it have to go? If GB decides to either raise IR or even keep them where they are because of the value of Sterling surely this would represent a u turn in his policies?

amcluesent

Clown's gonna go for a quickie election in May/June 09, while 'only' 250,000 have been made redundant.

That's why every problem is having voter-pleasing £££ Billions thrown around like confetti - mortgage holidays, Post office pension fund, Vauxhall cars, etc.

He's spinning like mad to smear anyone mentioning that it's all borrowed money, except that markets have noticed and are shorting GBP and shunning bonds.

Clown's happy, he's squandering other people's money as the socialist loves to to.

Even if he loses the election, he's left a scorched earth for the Tories. If he wins, well it's another 5 years with snouts in the trough, join the Euro "as the grave economic situation demands we do, hoots!" and swan off to Brussels with Mandy for a handsomely rewarded non-job and mega pension.

FACT Clown wants to destroy England out of sheer class hatred.

WTF?_2

handful wrote: »

That takes it back to my original point. If Sterling is to be left abandoned until such point that it becomes inflationary, how low will it have to go? If GB decides to either raise IR or even keep them where they are because of the value of Sterling surely this would represent a u turn in his policies?

No-one can really say. I suspect the government have a target level which they would defend somewhere but they certainly won't make it public knowledge.

I must say that despite all this talk of deflation, I don't see everyday living costs being much cheaper than they were this time last year (which were pretty expensive) although there are a lot of consumer bargains to be picked up right now.

IMO the notion that goods will just get cheaper and cheaper ad infinitum, causing people to stop buying in anticipation of future savings is bunkum. Firstly, lots of expenditure on goods/services are for day to day staples. Secondly, at some point it becomes economically unviable to produce and/or import the goods, destroying supply and halting price drops. That price point may be lower than where we are now but it does mean a definite cutoff point for any given class of goods, not seemingly endless price drops.

For 'stopping deflation' read 'stopping house price deflation'. So much of the governments' policy is based on a growing property market and people borrowing that they are desperate to stop the slide in overpriced houses and get property prices rising again. This is all about stimulating strong inflation to get the government and an overborrowed section of the population out of a very bad mess at the expense of savers and wage earners.

GingerSte

Personally I wouldn't be surprised if it turned out that a good proportion of the drop was purely due to the sort of speculation that brought us the recent oil price spike. However I do agree that the fundamentals for Sterling's weakening are there.

Personally I'm trying to take advantage of the situation. I work in civil engineering in Britain, and my company should benefit from the weak pound making our prices cheaper in Europe. That's the theory anyway!

moneymass

!!!!!!? wrote: »

I must say that despite all this talk of deflation, I don't see everyday living costs being much cheaper than they were this time last year (which were pretty expensive) although there are a lot of consumer bargains to be picked up right now.

IMO the notion that goods will just get cheaper and cheaper ad infinitum, causing people to stop buying in anticipation of future savings is bunkum. Firstly, lots of expenditure on goods/services are for day to day staples.

Well, some things get cheaper but others go up.Biflation, although I'm sure you knew this.

For 'stopping deflation' read 'stopping house price deflation'. So much of the governments' policy is based on a growing property market and people borrowing that they are desperate to stop the slide in overpriced houses and get property prices rising again. This is all about stimulating strong inflation to get the government and an overborrowed section of the population out of a very bad mess at the expense of savers and wage earners.

This.

Jim_B_3

Allowed to fall? Is someone going to watch it reach a certain point and then magically stop it? Like the Tories did to stop the pound crashing out of the ERM? In the same way that house prices weren't allowed to crash?

baby_boomer

Dig the cute thread title.

But it rather implies that someone at the top could still be in control of our currency :rotfl:

LOL. Jim just beat me to it!

SGE1

amcluesent wrote: »

FACT Clown wants to destroy England out of sheer class hatred.

lol, you make me laugh.

Datasafe_2

Surely this is as low as it can be allowed to get. At airports and other places, after commission and handling charges you get less Euros than you exchange in pounds

http://news.bbc.co.uk/1/hi/business/7782234.stm