Does the strength of Sterling reflect Britain's economic strength?

cepheus

As George Osborne claimed

The strong pound is "a mark of our success"......

Thrugelmir

And compared to other currencies?

CLAPTON

No............................................

purch

cepheus wrote: »

As George Osborne claimed

He is an idiot, and trying to claim the relative value of GBP is a simple reflection of our economic performance or potential performance is idiotic.

FX is relative, and far more complex than that.

mwpt

purch wrote: »

He is an idiot, and trying to claim the relative value of GBP is a simple reflection of our economic performance or potential performance is idiotic.

FX is relative, and far more complex than that.

He was probably just pandering to idiots. The job of a politician.

cepheus

Thrugelmir wrote: »

And compared to other currencies?

I think there is a weighted version of Sterling across all currencies which takes this into account isn't there? I suppose it's the ones we trade with which are most important. Sterling had been doing well against the Euro, but is now crashing against that as well.

Jon_B_2

Sterling was priced in for an interest rise because Carney.

Now it looks improbable in 2016 it's taking a turn.

CLAPTON

cepheus wrote: »

I think there is a weighted version of Sterling across all currencies which takes this into account isn't there? I suppose it's the ones we trade with which are most important. Sterling had been doing well against the Euro, but is now crashing against that as well.

what do you consider the right value should be?
should it be fixed for a thousand years?
are fixed exchanged rates a new (unannounced) Corbyn policy?
is any change in exchange rates bad if it occurs under a non Corbyn administration?
should we be concerned if you ever stop using 'crash' in a meaningless way?

Generali

The FX rate is not a proxy for the strength of an economy.

The FX rate is a proxy for portfolio and trade flows and for interest rate differentials.

Thrugelmir

cepheus wrote: »

I think there is a weighted version of Sterling across all currencies which takes this into account isn't there? I suppose it's the ones we trade with which are most important. Sterling had been doing well against the Euro, but is now crashing against that as well.

Do you think that the UK should follow the US's lead and start to raise interest rates?

michaels

One mechanism that increasing interest rates presses down on inflation is by strengthening the currency and thus reducing import prices - do we need to bear down on inflation at the moment?

Portfolio theory would suggest that expected returns in all currencies should be equal, returns being the amalgamation of interest and capital changes.