Lost all confidence in the pound.

hallmark

A LOT of the criticism of the budget, and consequently some of the decline in the pound versus the dollar was politically motivated.  Take a close look at the people who were shouting loudest.   Those same people (the BBC for example) made a huge song and dance about the post-announcement fall from $1.12 to $1.05 but have barely commented on the subsequent recovery back up to nearly $1.12.

The point is nobody knows yet whether the Truss/Kwasi measures will succeed or not, most of what we've witnessed is the people who desperately want them to fail, spreading as much fear as they can.

For example a top-rate of 40% was deemed the appropriate rate throughout 99% of Labour's 13 years in power but apparently now it would be inexcusable

Voyager2002

Chomeur said:

Supposing I decide that I have no confidence in the pound any longer, given the government's and Bank of England's seeming complete indifference to its decline (Kwarteng's only reaction to the fall of the pound yesterday seems to have been to say that he doesn't comment on market movements). That doesn't mean I want to emigrate, because I'm well set up here. I will probably always be able to earn some hard currency online somehow. What is the most logical thing to do with my savings? At the moment they earn about 1.5%pa. If I had converted them to dollars at the beginning of the year and converted them back now I would have earnt about 25% on them. So that 1.5% is pretty insignificant really.

If I have £10,000 I can convert it to dollars to keep in a dollar bank account. Probably I don't get interest on it. There will be fees. Or I can put £500 in a spreadbetting company and sell a £1 bet against GBPUSD. Then keep earning 1.5% on the £9500. Each way, if the pound falls another cent, I earn about £100. I might have to put more money in as margin if the pound goes up, but I can't see the pound going up over the next few years. My suspicion is that the spreadbetting option is more logical. I haven't done the maths, but does anyone have any opinions?

Just to note that if you choose your account carefully the fees will be minimal or zero. However, I am not aware of any account that pays interest on US dollar deposits.

Since we really don't know what will happen next in the currency markets, the rational strategy would be to split your cash between a number of different currencies (assuming that you wish to keep your savings in cash, which is unlikely to be wise for most people).

masonic

hallmark said:

A LOT of the criticism of the budget, and consequently some of the decline in the pound versus the dollar was politically motivated.  Take a close look at the people who were shouting loudest.   Those same people (the BBC for example) made a huge song and dance about the post-announcement fall from $1.12 to $1.05 but have barely commented on the subsequent recovery back up to nearly $1.12.

The point is nobody knows yet whether the Truss/Kwasi measures will succeed or not, most of what we've witnessed is the people who desperately want them to fail, spreading as much fear as they can.

For example a top-rate of 40% was deemed the appropriate rate throughout 99% of Labour's 13 years in power but apparently now it would be inexcusable

This completely misses the point that the tax cuts and additional spending is unfunded and unaffordable, which is the main source of consternation.

The top rate of tax is 60%, and that isn't changing.

jimjames

hallmark said:

 Those same people (the BBC for example) made a huge song and dance about the post-announcement fall from $1.12 to $1.05 but have barely commented on the subsequent recovery back up to nearly $1.12.

You mean like BBC publishing this as their front page headline this morning?

I don't understand the BBC bashing trying to divert attention from the chaos the government unleashed last week. They clearly stated they wanted to shake things up and seemed blissfully unaware these decisions have consequences despite the warnings from Sunak. It was their choice to not have OBR provide their data, their choice to sack the top Treasury official who might have avoided the problems, their choice to publish a budget without saying how to pay for it. It was all rushed out for absolutely no reason at all as the energy cap had already been announced.

Albermarle

 Those same people (the BBC for example) made a huge song and dance about the post-announcement fall from $1.12 to $1.05 but have barely commented on the subsequent recovery back up to nearly $1.12.

All these kind of stories, are always reported in the same way by all news organisations.

The downside is always reported in an exaggerated way. Inflation always SOARS, stock markets always PLUMMET and any subsequent upside is often hardly mentioned. So nothing at all unusual in the way this one was reported.

steampowered

hallmark said:  Those same people (the BBC for example) made a huge song and dance about the post-announcement fall from $1.12 to $1.05 but have barely commented on the subsequent recovery back up to nearly $1.12.

This is incredibly short term thinking.

I can't believe that you are criticising the BBC for reporting on the GBP : USD exchange rate reaching its lowest level ever. That's newsworthy. If this happened under a Labour government, the right wing press would practically be handing out riot kits.

Here is a graph showing what has happened to the pound over the last 10 years of Conservative government. The drop in value is approaching 50%. I pulled this graph 2 minutes ago from google:
 

The_Green_Hornet

steampowered said:

hallmark said:  Those same people (the BBC for example) made a huge song and dance about the post-announcement fall from $1.12 to $1.05 but have barely commented on the subsequent recovery back up to nearly $1.12.

This is incredibly short term thinking.

I can't believe that you are criticising the BBC for reporting on the GBP : USD exchange rate reaching its lowest level ever. That's newsworthy. If this happened under a Labour government, the right wing press would practically be handing out riot kits.

Here is a graph showing what has happened to the pound over the last 10 years of Conservative government. The drop in value is approaching 50%. I pulled this graph 2 minutes ago from google:
 

The bulk of that drop was due to the UK voting to leave the EU which the Conservative government at the time was against.

Yes you can blame Cameron for holding the referendum he promised in his 2015 manifesto but it was the people who made the ultimate decision.

DannyCarey

hallmark said:

A LOT of the criticism of the budget, and consequently some of the decline in the pound versus the dollar was politically motivated.  Take a close look at the people who were shouting loudest.   Those same people (the BBC for example) made a huge song and dance about the post-announcement fall from $1.12 to $1.05 but have barely commented on the subsequent recovery back up to nearly $1.12.

The point is nobody knows yet whether the Truss/Kwasi measures will succeed or not, most of what we've witnessed is the people who desperately want them to fail, spreading as much fear as they can.

For example a top-rate of 40% was deemed the appropriate rate throughout 99% of Labour's 13 years in power but apparently now it would be inexcusable

Its only pumped back up because BOE printed £65bn and created a fake demand for bonds etc. Germany printing €200bn. 

Fiat currencies globally are in trouble around the world. Countries like the US, although the strongest.. are certainly not immune to the fall out from all of this extra money printing,  chasing the same amount of work and goods. 

When you look at the China real estate time bomb, ludicrously expensive houses, rising interest rates, war and plethora of financial issues in the world its hard not to feel we are entering another 2008 meltdown. 

hallmark

The weakness of the pound has as much or more to do with the BOE's uber-doveish inaction on interest rates as it does with the mini-budget.   The weakness of the pound specifically against the dollar is in large part due to the dollar's strength against all currencies.

GBP vs Euro over the last 5 years is basically up and down and currently around average.

steampowered

hallmark said:

The weakness of the pound has as much or more to do with the BOE's uber-doveish inaction on interest rates as it does with the mini-budget.   The weakness of the pound specifically against the dollar is in large part due to the dollar's strength against all currencies.

The only reason the pound recovered slightly was after the BoE's record breaking intervention.