Sterling Weakens Against Euro

DecentLivingWage

Worst month for pound since December 2008 - as investors give up on Osborne and look to non austerity havens where recovery is blossoming .

robmatic

DecentLivingWage wrote: »

Worst month for pound since December 2008 - as investors give up on Osborne and look to non austerity havens where recovery is blossoming .

I guess you haven't read the rest of this thread then? Oh dear.

Generali

robmatic wrote: »

I guess you haven't read the rest of this thread then? Oh dear.

(S)he's too busy reading the propaganda.

The value of the pound against other currencies is rarely a reflection of Government policy unless there's a fixed FX regime in place. The UK has thankfully been free of that self-imposed yoke since the 1990s and long may it continue.

Fella

Generali wrote: »

(S)he's too busy reading the propaganda.

Lol it's like DLW has some special kind of disorder that only allows him to talk in nulabor soundbites. I have visions of what his youth may have been like:


(At the breakfast table)


"Here's your breakfast dear, I've cut your toast into fingers just how you like it"


DLW: "Downtrodden workers forced to eat scraps by evil Tory overlord!"




"Sorry we only have normal bread, not that expensive stuff you like, money's a bit short this month. I did get those biscuits you like though"


DLW: "Youth must live on crumbs thanks to austerity. Osbornes must go!!"




"Is there any chance you could pay some housekeeping this month dear, it's quite difficult to support you while all you do is post on that Internet all day & we haven't had a holiday in years"


DLW: "Evil Tory landlords demand huge rent increases to pay for fatcat cruise!!!"




And so on...

N1AK

Fella wrote: »

DLW: "Evil Tory landlords demand huge rent increases to pay for fatcat cruise!!!"

One of the best humorous, and yet accurate, posts I've seen on here in a while! :rotfl:

gagahouse

The weakening of the pound seen recently is an unwinding of the safe haven trade that sterling benefited from during the worst phases of the Euro crisis. The market is sending a clear signal that it believes the worst of the Euro crisis is past us, that's why eur/usd, eur/chf and eur/yen have rebounded from historical lows. We also see rotation out of bonds into equities and the gilt-bund spread widening again back out to historical averages.

The UK is still running deficits around 7-8% of GDP and economic growth is too weak to improve the fiscal situation, so I would expect a further weakening of £. The government is in a sticky situation - it needs to cut more aggressively but can't as the economy is too weak to forego the stimulus of deficit spending. I'm afraid this is the legacy of Labour's mismanagement of the economy, leaving successive governments little room for manoeuvre. Economists talk of the zero level bound of interest rates which we've reached. I also similarly believe we reached the top level bound of credit expansion in 2007/2008 and the UK faces a combination of devaluation of the currency and an internal devaluation of real wages (as in Greece, Spain, Portugal) as its only means of adjustment, regardless of who is / will be in power.

Generali

gagahouse wrote: »

The weakening of the pound seen recently is an unwinding of the safe haven trade that sterling benefited from during the worst phases of the Euro crisis. The market is sending a clear signal that it believes the worst of the Euro crisis is past us, that's why eur/usd, eur/chf and eur/yen have rebounded from historical lows. We also see rotation out of bonds into equities and the gilt-bund spread widening again back out to historical averages.

The UK is still running deficits around 7-8% of GDP and economic growth is too weak to improve the fiscal situation, so I would expect a further weakening of £. The government is in a sticky situation - it needs to cut more aggressively but can't as the economy is too weak to forego the stimulus of deficit spending. I'm afraid this is the legacy of Labour's mismanagement of the economy, leaving successive governments little room for manoeuvre. Economists talk of the zero level bound of interest rates which we've reached. I also similarly believe we reached the top level bound of credit expansion in 2007/2008 and the UK faces a combination of devaluation of the currency and an internal devaluation of real wages (as in Greece, Spain, Portugal) as its only means of adjustment, regardless of who is / will be in power.

Spot on IMHO. The mistakes have already been made, the trick is finding the least worst route out.

[Deleted User]

Excellent news for me though as a consultant who gets paid a fixed daily rate in euros. Fall in the euro over the last few years has cost me £100s/month....

GeorgeHowell

Currencies go up and down all the time. Much of the short terms movements are due to speculation. It means nothing unless it heralds a longer term devaluation of the £ versus other major currencies, and only a significant period of time will determine whether that is the case.

Thrugelmir

Agent-47 wrote: »

There are no contingency plans for loss of confidence in the system.

Confidence only affects day traders. In the real world people deal with the facts and plan for the various possibilities.