Hmm, pound is looking a bit scary today!

Generali

purch wrote: »

As is usual, the plans appear to be being made after the events, rather than the other way around :eek:

C'mon purch, this is just a good old fashioned Sterling crisis. Where's your sense of history?

As previously, the falling pound will cause imports to feel bit more expensive while providing a shot in the arm to exporters.

As to Governments planning FX rates, that's never gone well!

Graham_Devon

Manufacturing has fallen again. Was the lower pound not supposed to help this sector?

I;m not suggesting it's as easy as a falling pound = increased manufacturing. But it was another "shock" fall. So is the pound really helping? Or is that a smokescreen used by the BOE?

Exports have decreased 3.5% in the same period that the pound has been falling.

Generali

Graham_Devon wrote: »

Manufacturing has fallen again. Was the lower pound not supposed to help this sector?

I;m not suggesting it's as easy as a falling pound = increased manufacturing. But it was another "shock" fall. So is the pound really helping? Or is that a smokescreen used by the BOE?

Exports have decreased 3.5% in the same period that the pound has been falling.

It's known as a J Curve.

As the Pound falls, in the first instance export values decrease as each unit sells for less and import values increase as each unit is purchased for more. This is because there are contracts in place that have to be met at pre agreed prices and quantities.

However, as (if?) we continue with the Pound at a lower level new contracts will be struck which are less attractive to importers and more attractive to exporters. As a result the trade balance will shift quite quickly.

Look at the data around the time the UK was booted out of the ERM and the same thing happened. This is the reality of how business works.

System

Generali wrote: »

It's known as a J Curve.

As the Pound falls, in the first instance export values decrease as each unit sells for less and import values increase as each unit is purchased for more. This is because there are contracts in place that have to be met at pre agreed prices and quantities.

However, as (if?) we continue with the Pound at a lower level new contracts will be struck which are less attractive to importers and more attractive to exporters. As a result the trade balance will shift quite quickly.

Look at the data around the time the UK was booted out of the ERM and the same thing happened. This is the reality of how business works.

Do you have to be so rude and patronising?

Generali

Joeskeppi wrote: »

Do you have to be so rude and patronising?

Is that a typo? Where you meant to type the word 'right' you typed 'rude and patronizing' in error.

It's an easy mistake to make. One I've made many times in the past.

System

Fnar fnar.

wotsthat

Graham_Devon wrote: »

Manufacturing has fallen again. Was the lower pound not supposed to help this sector?

I;m not suggesting it's as easy as a falling pound = increased manufacturing. But it was another "shock" fall. So is the pound really helping? Or is that a smokescreen used by the BOE?

Exports have decreased 3.5% in the same period that the pound has been falling.

It's not just like turning on a tap - we don't have factories full of idle workers just waiting for a certain exchange rate to be reached before producing at full capacity.

Also, when the biggest UK manufacturing exporter is selling jet engines innovation, customer relationships and after-sales service are significant factors too. I'd bet that whilst exporters of high value items welcome lower exchange rates, stable rates are better for business planning and longer term profitability.

purch

wotsthat wrote: »

It's not just like turning on a tap - we don't have factories full of idle workers just waiting for a certain exchange rate to be reached before producing at full capacity.

That would be a good idea.

Have a huge Reuters screen installed in every factory.

When GBP rises the workers can have a tea break, and when it falls they all start manufacturing widgits at a furious pace.

purch

sabretoothtigger wrote: »

I doubt parity occurs this year.

I'm not sure that anybody was predicting that :eek:

I have read a paper from the University of Bideford (formerly Westward Ho Polytechnic) saying something similar, but that is all.

Thrugelmir

Graham_Devon wrote: »

Exports have decreased 3.5% in the same period that the pound has been falling.

Europe is in recession to.

We are going to stop hoping that someone else is going to bail us out of our mess soon.

Time to wake up is soon approaching.