Hi, I had a little €/£ chat going on here somewhere in General but I can't locate it this morning. It would be good to have some quality discussion on what is a very significant ratio affecting the price of goods in and from the UK, pensions, property speculation, holidays... Allow me to present a potted modern history: I believe that around 1992 the ERM had 0.74 (1.35) in mind for the Euro Pound (Pound/Euro) to be pegged. For quite a few years since the introduction of the Euro, the rule of thumb for most holidaymakers was 0.67, two thirds (1.5). This was convenient and usually not far from the truth. From 2007, the Pound dropped in large steps 1.45, 1.35, 1.2, 1.1 (I can't be bothered to do 1/x here). Over December 2008 the media threatened parity; 1:1! Shortly after the start of 2009, the EUR/GBP dropped from 0.96 to 0.93 where it hovered, roughly, before dropping to where we are today 0.89. €/£ is threatening a rise over the last couple of days but, as I have asserted for some months here, I think that the Euro is due a real shock. From personal experience, goods in the Eurozone are too expensive in Sterling terms. With few exceptions, everything that one buys looks cheap when visiting the UK. The switch from FFR, ITL, DMK, PTA caused a lot of price inflation, devaluing pensions and many salaries such that common items were put out of the reach of common people. The massive social costs of Europe and trying to reconcile different economies (Ireland, Greece, Germany, Portugal, Baltic states) into one trading zone is going to reveal cracks before long. Nationalistic gestures will cause offence as demonstrations increase and protectionist policies are introduced. Europe is behind the curve of the US and the Commonwealth in this recession, the INSEAD statistic crunchers are slow and the news is even slower. It's not easy here to downsize your businesses or your public sector but the economic engines of Eurozone consumption, exports, tourism, construction, fiscal revenues are slowing significantly.
Monaco, totally agree, I posted somewhere that sterling was a good buy in terms of currency. if treated like a share or commodity we always look to buy in at a nice low price especially if we think that it is undervalued. Luxury goods in the uk seem to be doing ok because of relative cheapness, burberry???
Monaco, i read the first para and the..... well I think you been drinking too much coffee! lol for what it's worth i opened a long on euro/£ (based on charts) last night - up 90pips! was up at 135 pips but retracing now. I'm using hourly chart 15/50ma's
spain just announced 17% unemployment rate, germany will confirm worst recession in modern history, france shrugging shoulders at the moment and ireland in dire straits. Italy trying to cope with a national disaster and new entries from eastern europe will be parasytic for a few months yet. expect the EU Centrl bank to anounce quantivie easing via printing money also in a vague hope to entice greater exports. expats in spain are sending out jingle mail so for me the mid term trend for the euro is going down in value. don't change your holiday money just yet
thiunk you are right for the short term, short Euro to pound. However think dollar will strengthen over the coming months. worth protecting gold profits where possible, a slight drop in gold prices in dollar terms over the next 3 months in my opnion
Your post Monco of 24th april very good Monaco. Sterling has had a bumpy ride recently.I personally am very undecided about the Euro v Sterling and would certainly not bet on it.Some of the european bank shares have been improving strongly like Santandar Deutsche Bank BVVA.Taking the longer view ether sterling is oversold or it has since 1997 been overvalued and we have come down to earth. Sterling rose on the back of the property boom - I am wary o going along with the the sterling bulls until after the general election and we know what will be done to manage the budget deficit and whether policies will be put in place that will encourage exporting.The depreciation of sterling is cutting imports. I do not think that because everything is expensive for us in europe is adequate reason to re-rate sterling substantially -it is just that we do not earn enough in the world -investment is stangled and earners are overtaxed by a high spending government that thinks we can carry on its own sweet way !
ECB President Jean Claud Trichet is opposed to QE as German Bundesbank -they have given a little ground on liquidity but he says quite openly-'my signature is on the notes -we are expected to guarantee it for the next 50yrs'The ECB view is that member countries must curb their budget deficits including us. Some analysts recently been saying -buy unwanted unloved sterling because they want their forex dealers to make money -but whilst they can cause a flutter sterling is unloved for good reason -the LABOUR GOVERNMENT DON'T GIVE A MONKEYS ABOUT STERLING -as for the MPC -well Mervyn King has been showing some teeth lately and if he keeps showing his teeth sterling will look less sickly. Mandlesohn now talking of 10yrs of cuts -but what cuts and who pays. With Labour you will be sure to find out that it will be the low paid taxpayers who earn their living whilst their welfare clients get indexed link rises plus free central heating and teeth . Until we know whether business exports and earners will get a fair deal any rise in sterling cannot last.
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