Will the euro continue to rise against the pound?

Deals_2

just wanted to see people opinions and how long do you think this will rise. thanks in advance.

ad9898_3

Not much longer, ECB will be cutting soon as well, TBH I see Sterling around the 1.20 mark by the end of 2009.

Deals_2

as not really economist does this mean when the ECB is cut that the euro's value will come down again...? but are they not going to cut uk interest ratest again..?

ad9898 wrote: »

Not much longer, ECB will be cutting soon as well, TBH I see Sterling around the 1.20 mark by the end of 2009.

purch

does this mean when the ECB is cut that the euro's value will come down again...?

No............Interest Rate differentials are not the main driver of Exchange Rates.

There are far more complex fiscal drivers on relative exchange rates and the actual interest rates are of minor consequence.

Of course it is far easier for the media to portray these complicated issues in the most simplistic terms.

mewbie_2

purch wrote: »

Of course it is far easier for the media to portray these complicated issues in the most simplistic terms.

And thank goodness they do.

Deals_2

do you also think the euro will go down again by the end of the year??? or sooner?

purch wrote: »

No............Interest Rate differentials are not the main driver of Exchange Rates.

There are far more complex fiscal drivers on relative exchange rates and the actual interest rates are of minor consequence.

Of course it is far easier for the media to portray these complicated issues in the most simplistic terms.

barrooo

Most 'experts' seem to think the euro will reach parity with the pound, however they said that about the aussie/us dollar, which reached 0.9850 earlier this year before falling back.

I have a feeling something similar will happen with the EUR/GBP

cepheus

They say the currency is an indicator of the state of health of the economy. What is worrying is that since 2007, sterling has lost 24% against the Somalian shilling, 27% against the Burmese Kyat, 25% against Belarus's ruble and more than 20% against the Sudanese pound. It also lost at least a quarter of its value against the currencies of Yemen, Kazakhstan, Albania, and Libya. One of the biggest declines has been a 38% slump against Moldova's lei. (OK this is worded in the form of Tory propaganda but true non the less)

It is because we have invested so much in the banking sector which was poorly regulated (partly due to Thatcher) or perhaps the pound was simply overvalued before?

abaxas

Maybe we have simply 'gubbed' before them?

The yanks popped first, then a year later us. Then maybe euroland in 2009?

Kenny4315

:mad: MR Clown & Hs Darling. :mad:

Enough said I think.

purch

perhaps the pound was simply overvalued before?

It certainly was overvalued in the recent past, and because of this the adjustment has been severe and faster than it may otherwise have been.

In reality GBP is probably now undervalued, and over time that will re-adjust, but not anytime in the very short term.

I love this piece written by John Needham of 'The Daniel Code' fame....

The death of the Pound as it succumbs to the artless buffoonery of Prime Minister Gordon Brown’s attempts to position himself as a global master of the black arts of fiscal and monetary policy in an antithetical succession to his years as Britain’s Chancellor of the Exchequer , when the seeds of the Pound’s demise were laid.

When you have a fiscal situation as bad as the UK faces, and a monetary policy that is unable to resolve the immediate economic problems you face, then your currency has to take the strain.