The pound

Graham_Devon

Need a little education on this one.

Can anyone tell me the reasons as to why a low pound is good for us? And I do mean at this moment in time, not just in general.

It's been falling for a while, but today seems to have fallen pretty sharply.

So is this good news for us?

All i can remember last time this happened is my costs (business wise) got more expensive as most of it is imports (IT consumables etc), plus my living costs rose (fuel etc).

So what's the deal with the pound? Is it better to have a lower pound at the moment, or a higher pound?

And in general, why is it weakening?

drc

Other countries will buy from us 'cos it's cheaper and we produce so much great stuff which they really want?

worldtraveller

Really depends who you mean as "us". A cheaper pound makes our manufactured goods cheaper domestically & overseas and will therefore hopefully aid a growth in manufacturing (and do we need it!!) & exports, thus improving our trade balance. However, a cheaper pound against the USD, makes most imports/commodities more expensive (and resultant potential increases in inflation as I posted HERE today). Another benefit is increased earnings from UK companies operating abroad. Also, as an individual, if you have shares/unit trusts, etc. in, say, U.S. companies doing well, you should benefit as the returns in USD will give a higher GBP figure.

Asheron

It can be good depending on the value of other currencies

BUT

Because they are devalueing all currencies at the same time, it is not good.

+

what exactly do we make or sell anymore?

I did see a pencil sharpener that said made in England

Asheron

drc wrote: »

Other countries will buy from us 'cos it's cheaper and we produce so much great stuff which they really want?

Lol exactly, they closed our last steel plant and shipped it to India

Do you people really believe this Depression is all a big accident ?

aelitaman

Also lower pound means production can be moved back to the UK, remember all the poles complaining that it was now not worth working in England because the amount of Zloties sent back to Poland had reduced so much due to the weak pound.

As to why the pound is falling it is simple the rest of the world Asia, Australia, USA, Germany,France and even Japan seem to be coming out of recession before us and quicker than us. Then the dire public sector borrowing figures, retail sales figures and the fact that we need to borrow a heck of a lot of money means that isitutional investors are selling the pound.

aelitaman

Asheron wrote: »

It can be good depending on the value of other currencies

BUT

Because they are devalueing all currencies at the same time, it is not good.

+

what exactly do we make or sell anymore?

I did see a pencil sharpener that said made in England

Do you know that 77% of the output of the ftse 350 manufacturing companies is exported!

Conrad

drc wrote: »

and we produce so much great stuff which they really want?

Yep we do, here's an example;






Solid State Logic are the world leaders in high end mixing desks, all made in Oxford

The_White_Horse

the pound is falling because other countries think it is weak due to the INSANE borrowing Brown is doing at the moment - the country is not getting in tax what it spends on the public sector salaries/pensions and benefits. Let alone the NHS, Education, Defence etc and so on. The country, under the brilliant leadership of the Lefty is, in all but name, bankrupt. Other countries know this and have no desire to buy or hold pounds.

Brown and his Lefty ilk have destroyed this country.

Anyone that voted for them should be fined heavily to pay for the mess they have made.

New Labour - Things can only get better, if you're a workshy benefit claiming sponger of a public sector leech. Otherwise things will actually get MUCH worse!!

StevieJ

Asheron wrote: »

It can be good depending on the value of other currencies

BUT

Because they are devalueing all currencies at the same time, it is not good.

+

what exactly do we make or sell anymore?

I did see a pencil sharpener that said made in England

Seems quite a lot as we are the 6th largest manufacturer in the world

http://investing.curiouscatblog.net/2009/10/13/data-on-the-largest-manufacturing-countries-in-2008/

nearlynew

All paper currencies eventually reach their intrinsic value i.e zero

What we are seeing is a slow race to the bottom.