Inflation, Inflation, Inflation...

Nick_C

wotsthat wrote: »

It's a fact sterling is at multi decade lows and dropped significantly post 23rd June.

Against the USD, yes.

Against the Euro, GBP is at the same sort of level we were used to in 2009 through 2011.

Against the Canadian and Australian Dollars, GBP is at the same sort of level we were used to in 2010 through 2013.

Against the Indian Rupee, GBP is stronger than at any time from 2009 through 2011.

It's a big world out there. Currencies fluctuate. Yes, oil is priced in USD, but it shouldn't be the only yardstick.

There is bound to be some uncertainty until Brexit is completed, but the world is not going to end.

wotsthat

Nick_C wrote: »

Against the USD, yes.

Against the Euro, GBP is at the same sort of level we were used to in 2009 through 2011.

Against the Canadian and Australian Dollars, GBP is at the same sort of level we were used to in 2010 through 2013.

Against the Indian Rupee, GBP is stronger than at any time from 2009 through 2011.

It's a big world out there. Currencies fluctuate. Yes, oil is priced in USD, but it shouldn't be the only yardstick.

There is bound to be some uncertainty until Brexit is completed, but the world is not going to end.

I'm not suggesting the world will end.

Yes, it might be stronger against some currencies than others but on trade weighted basis Sterling is at all time record lows.

Conrad

wotsthat wrote: »

I'm not suggesting the world will end.

Yes, it might be stronger against some currencies than others but on trade weighted basis Sterling is at all time record lows.

IMF have been pointing out the world has been engaged in deflation and currency wars. Think about the problems around Chinese steel dumping for example.


Sterling achieving fair value is perfect timing

Nick_C

wotsthat wrote: »

it might be stronger against some currencies than others but on trade weighted basis Sterling is at all time record lows.

No it isn't. It was at an EERI low on 17th October. It has gained 4% since then (latest published data for Tuesday 15 November).

It has been at a lower level on 65 occasions than it is currently ; seven times in 2008, 24 times in 2009, twice in 2010, and 32 times this year.

And although an "all time record low" sounds serious, this index has only been around since 1990, so it's a pretty limited view of history.

wotsthat

Nick_C wrote: »

No it isn't. It was at an EERI low on 17th October. It has gained 4% since then (latest published data for Tuesday 15 November).

It has been at a lower level on 65 occasions than it is currently ; seven times in 2008, 24 times in 2009, twice in 2010, and 32 times this year.

And although an "all time record low" sounds serious, this index has only been around since 1990, so it's a pretty limited view of history.

OK. We're within a month and 4% of recorded record lows (since 1990).

I think it's fair to say that the value of Sterling is really quite low and this will, more than likely, have an inflationary effect.

Also just because this measure only goes back to 1990 doesn't mean we can't surmise Sterling has been stronger for many of the previous years. Apart from a quick crash in the eighties Sterling is at it's weakest since against the $ at least 1953 and probably much longer (other currencies are of course available).

StevieJ

March 1st 1985 Sterling/USD 1.0520 . Theresa still got some way to go before she can emulate Hilda I remember it well.

Nick_C

wotsthat wrote: »

I think it's fair to say that the value of Sterling is really quite low and this will, more than likely, have an inflationary effect.

Completely agree. Forecast to rise to 3%. A weak pound is good for exporters though.

steampowered

Conrad wrote: »

Sterling achieving fair value is perfect timing

I am curious why you believe £1 to $1.2 is 'fair value'. Is that really all we are worth?

That's a really depressing, negative view of this country's economy. We were at £1 to $2 only a few years ago. You must think we are in long term decline. It implies a sizeable drop in what our economy was worth pre-Brexit and implies a drop in people's living standards.

Any Brexiteer who genuinely believes that Brexit won't do economic damage to this country should think that the dramatic sell-off in the pound by the global financial markets was an overreaction, and should therefore be placing bets on the value of the pound increasing.

Nick_C

steampowered wrote: »

I am curious why you believe £1 to $1.2 is 'fair value'. Is that really all we are worth?

That's a really depressing, negative view of this country's economy. We were at £1 to $2 only a few years ago. You must think we are in long term decline. It implies a sizeable drop in what our economy was worth pre-Brexit and implies a drop in people's living standards

As my father was a US citizen paid in USD, I have always been aware of the exchange rate. As a child in the 60s, I remember an exchange rate of $2.73 to the pound. (My mother was delerious when the dollar achieved near parity with the pound in the 80s). So against the USD, the pounds is now worth less than half of what it was when I was a child. But people generally seem much better off!

antrobus

Nick_C wrote: »

As my father was a US citizen paid in USD, I have always been aware of the exchange rate. As a child in the 60s, I remember an exchange rate of $2.73 to the pound. (My mother was delerious when the dollar achieved near parity with the pound in the 80s). So against the USD, the pounds is now worth less than half of what it was when I was a child. But people generally seem much better off!

Here's a graph of cable since 1915
http://www.miketodd.net/encyc/dollhist.htm

Sterling was trading at over 4 dollars before WWII. Despite the fact that the rate is now 1.25, I think that people are generally better off now than they were in say 1937. We might have been even more better off than had we managed to keep the rate at 4, or even the 2.80 it was before Wilson's devaluation. But then you can't do that unless you stop running trade deficits.