steve McCulloch

My booze trips are getting more and more expensive to France and I want to know why the Euro has started to get much stronger in the last 6 months

I mean we have higher interest rates than the ECB and the 'Euro' economies (i.e Germany) appear to be in dire Straits financially so what is propping the Euro up, is it the Jap central bank propping up the Euro.... I know we have a large balance of payments deficit that clearly does not help... or could it be that our inflation is or is forecasted higher > money supply> inflation, depreciating our currency against the Euro

I dont know - can someone explain why to a a novice?

ajm

<cynic>
I reckon Tony is bleeding our economy into Europe so that eventually it will be so crap the exchange rate will be 1.00 - then all of a sudden pounds will become Euros, and Blair will be president!
</cynic>

alcazar

iTrader: (2)

It's to do with two things:
1. We are still too tied to the dollar, and the banks are afraid of the possibility of war.
2. It's mainly because certain politicians have been talking about us going in sooner rather than later. This makes the banks see the euro as more viable, so it gains against us.
The slightly cynical view is that the politicians are doing it to drive the pound down against the euro, to make it easier for us to join. No other european state would have been happy with the £ coming in at 1.6 Euros, but if they can "talk it down" to nearer 1.4, that'll be OK.
Problem for us will be, while they're doing it, the TOURIST rate for booze runs, will be nearer 1.3
Alcazar

WISHING

So would it be a good idea to buy lots of euros now? Before we go into it ??

This isnt a wind up, im not very up on the euro thing.


WISH

steve McCulloch

Would be interested to see ho wthey are talking down the £

Cant see the Bank of England getting involved in currency manipualtion like the Bank fo Japan does on a regular basis cos it costs ,money and our foreign exhange reserves are much lower

I take the point about the old tie in with the Dollar, and the looming war, although this would not really explain why Sterling was going up against the Dollar, you'd expect it to stay in a narrower range and generally.... then again the US economy is in Dire Straits.. I do wonder how they actually finance their spending

I think I will set up a Euro account and get some Euro's into it as at the moment the £ is only going one way and thats down!

Steve - an economic novice.... so I apologise if anything sounds stupid!

alcazar

iTrader: (2)

Steve: its not the B of E that are talking it down, it's the politicians.
I know because I e-mailed them to ask why it was falling, and the B of E gave me that reply:
Alcazar