Hmm, pound is looking a bit scary today!

Thrugelmir

Masomnia wrote: »

Are markets anticipating further monetary easing by Carney?

The BOE is happy to let sterling slide. As improves competitiveness. So should boost the economy.

Given vast sums in mortgage securitisation issues were raised abroad in the credit boom years and since. Then traders will be looking to hedge their investments against loss.

sabretoothtigger

Mervyn and Carney have become like the Roman Praetorian guard. Instead of defenders of British currency, they are its executioners.
All they need to do now is auction off the nations titles to the highest bidder to finish it off

Are markets anticipating further monetary easing by Carney?

Fed Ben declared rates zero till 2014 in order to help surpress worth of Dollars and details of Carneys interviews effectively lets similar be known here also (sterling needs much less help)

worldtraveller

The FT yesterday cited some reasons why Sterling is, and is likely to continue weakening against the USD:

- More speculators are shorting the pound than buying it for the first time in five months, according to figures from the US Commodity Futures Trading Commission.

-Many asset managers say they have slashed their positions in the gilt market on the expectation that yields will climb and sterling will weaken.

-The BoE has signalled it would be happy to see a weaker pound boost exports in the UK’s struggling economy. Martin Weale, a member of its monetary policy committee, said in a speech on Saturday that the gains for the UK economy due to the depreciation of sterling since the financial crisis in 2008 had been “disappointing”.

sheffield_lad

Lets hope Carney does fix rates until 2014/15 everyone knows there is no uncertainty and maybe just maybe it could act as a stimulus for growth.

I am not sure the gov knockers realise that a weak pound is good for manufacturing if they export and focus on not getting a good holiday rate or warning that it will have dire consequences for inflation. It will effect inflation but on balance a low £ is the way to go.

Generali

howee wrote: »

Lets hope Carney does fix rates until 2014/15 everyone knows there is no uncertainty and maybe just maybe it could act as a stimulus for growth.

I am not sure the gov knockers realise that a weak pound is good for manufacturing if they export and focus on not getting a good holiday rate or warning that it will have dire consequences for inflation. It will effect inflation but on balance a low £ is the way to go.

It looks like I'll get a good holiday rate which means I'll probably spend more when I visit the UK this summer. I won't be the only one either.

Save me a Red Rum burger!

MacMickster

howee wrote: »

Lets hope Carney does fix rates until 2014/15 everyone knows there is no uncertainty and maybe just maybe it could act as a stimulus for growth.

I am not sure the gov knockers realise that a weak pound is good for manufacturing if they export and focus on not getting a good holiday rate or warning that it will have dire consequences for inflation. It will effect inflation but on balance a low £ is the way to go.

A weakened pound certainly helps our exporters, and brings advantages by encouraging foreign tourists to visit whilst deterring Brits from taking foreign holidays and buying BMWs.

Unfortunately, we import far me than we export, and included in our imports are oil and gas - the very things that British manufacturers need to produce goods. This will stop them from getting the full benefit of the weak pound.

There has been a great deal of restraint by UK employees in recognition of the current economic climate, but faced with increasing inflation, wage restraint is unlikely to last indefinitely and we do then risk an inflationary spiral. This will, of course, put pressure on interest rates.

sabretoothtigger

It depends what their main costs are. It helps reduce cost of labour relative to the price, if they are exporting goods that require imports or just energy it'll be counter productive as the costs to that business will rise.

We actually get poorer through this, good for business relies on us being cheap. Poor people are pretty desperate and cheap I guess

Generali

sabretoothtigger wrote: »

It depends what their main costs are. It helps reduce cost of labour relative to the price, if they are exporting goods that require imports or just energy it'll be counter productive as the costs to that business will rise.

We actually get poorer through this, good for business relies on us being cheap. Poor people are pretty desperate and cheap I guess

You're making the mistake of thinking the world is a binary place where things are either 'cheap' or 'expensive'.

Rest assured that even if the pound drops to $1.40 your labour will still be some of the most expensive in the world.

Generali

sabretoothtigger wrote: »

It depends what their main costs are. It helps reduce cost of labour relative to the price, if they are exporting goods that require imports or just energy it'll be counter productive as the costs to that business will rise.

We actually get poorer through this, good for business relies on us being cheap. Poor people are pretty desperate and cheap I guess

Regarding your first point, this is only a problem if you're metal bashing: taking basic inputs and turning them into basic outputs. The early 80s recession was largely about those sorts of companies closing as they couldn't compete and were no longer being subsidised (insert Thatcher insult of choice).

Most industry in the UK now has a greater added value. I'm not saying that's a good or a bad thing but it means less pressure on output costs as a result of higher input costs.

Look at it this way: if you're making plain white T-shirts for sale in WalMart the cost of the cotton as a proportion of the price of the finished product is going to be a lot higher than if you make high tech fireman uniforms which sell for thousands of pounds each.

Thrugelmir

MacMickster wrote: »

There has been a great deal of restraint by UK employees in recognition of the current economic climate, but faced with increasing inflation, wage restraint is unlikely to last indefinitely and we do then risk an inflationary spiral.

Who is going to sacrifice their job for a few quid more. Holding onto what you've got is what matters.