Doller to the Pound - What is Happning
 

Whats happning to it...was little over $2 to £1 not its down to $1.82 to £1 :wonder:

Tell me about it! Just added about £2 to my lunch in the hotel restaurant:mad: !

The reason is that the UK is expected to fall (if it hasn't already) into a recession. A recession means low growth. In order to stimulate growth the Government can either lower taxes (I think not:mad: ) or the Bank of England can cut interest rates. Both of these solutions would see more money sloshing around the economy to help it get moving again. The downside to cutting interest rates is that people who invest their money in the most profitable currencies will look elsewhere because our interest rates will be lower than others. Less demand for our currency results in its value dropping. That's good for our exporters because our goods become cheaper abroad, but is bad for Brits travelling to the States because everything is now more expensive.

I know the meaning of life too....

The pound has been overvalued for some time, that's why stuff in the US/Japan etc has been so cheap for us.
International financiers are seeing the weakening of the UK economy and so the pound is slipping in value - a lot of investors are moving out of Sterling and into other currencies. Its lost about 5% against the dollar in recent weeks.
If the BoE cuts interest rates in the next couple of months then expect it to slip further. This will lead to more expensive imports (so fuel and a lot of manufactured goods will increase in price) and hence inflation will increase. Your wages will probably not rise as much as prices so you'll be a bit worse off. Also your foreign holiday next year will cost a fair bit more.

the credit crunch cost me my job
m,ade redudant fro ma mortgage brokers after 6 years due to downscaling all operations!

Sorry to hear that and I hope you find another job soon. I imagine a lot of staff in mortgage brokers, estate agents and the financial services in general will be out of work over the coming year. Some new houses are being built near where I live, but all work has been stopped, all staff laid off and there is no one on site any more, not even security! I think we are in for a really severe recession.

Very good explanation! Shame as I'm off to the US for a quick business trip and was thinking of picking up a few toys, but it's not as attractive as it was last year. Although, my bonus is paid in dollars :)

Gone back up a little then... last week it was $1.73 to the £ at the PO

We manufacture so little in this country of ours that other economies no longer need sterling to purchase our goods this makes sterling an unattractive currency, therefore our inflation is more and more being driven by the economies of other nations.
Many companies have moved the manufacture of their goods to cheaper eastern european countries for several reasons, but in my opinion it has been to maintain or increase the profitability of their goods per £ spent on raw materials. This has left us at the mercy of the rate of inflation that exists in these countries (as these rates and also the global rate of raw goods that get set in the commodity markets) dictate the price of goods that we pay in this country and this in turn sends our inflation up. But now, we are no longer able to control inflation to the same degree that we were able to in the past, rather we are at the mercy of the pay rises and higher standards of living being enjoyed by the workers in these emerging european countries.

If a worker from a qualifying european country comes to work in the UK, and he takes a low paid job, he may receive housing benefit payments as there is a shortfall between how much he earns and how much housing costs in this country, this in turn creates a shortfall in the amount of money raised by taxes, and then our government needs to raise these tax levels to address the shortfall, so what does Brown do? He raises the tax on my pride and joy and tells me he is saving the planet:eek2: With the increase in revenue being given to the governments coffers from this increase and the huge revenue increase from the v.a.t levvied on fuel sales, surely we would see income tax rates falling, or at least the national debt declining? But no, what we have witnessed in this country is the government recinding its tax breaks for the poorest workers simply because more and more people are slipping into this bracket making it unviable to give these tax breaks to so many taxpayers.

Gutted ive just ordered a turbo from the US and it cost me almost £200 more than it would of done a month or so ago :(

So anyone here invested in any dollers? i can only assume the rate will fall more?

Typical.....just as I'm about to be buying some dollars. :rolleyes:

I love quotes like this :D


Go to the Post Office today. They will probably be offering 1.69 or something. The Post Office rate and the wholesale FX market rate aren't *quite* the same. :)

Got a few hundred $ in travellers cheques, haven't got round to putting them back into my bank account. Perhaps I should wait a while :lol1:

It means that our economy is going even further down the tubes!

Les

Issue at the moment is that inflation is already above target. High interest rates usually keep inflation in check as it means the cost of spending (either by taking out a loan or by losing interst on savings) is higher so less demand = no supply issues = lower inflation.

However, to get people spending they could do with lowering interest rates which will only increase inflation so the bank is a bit stuck!

5t.

Welcome to 2nd world status

It's great news.:luxhello:

Company I work for are American and I get shares every year, but the shares are on the NYSE and are sold in dollars.

So when I sell them this is better for me, and since there's over 25,000 dollars worth it can make a big difference ............. like a new Canon 50D :norty:

Wholesale market prices adjust instantly to take into account all available information at any point in time. It is fair to say even the professionals don't have a scooby as to what will happen next.

'Cable' (which is what the fx market calls the GBP-USD currency pair) has been notoriously volatile in the past and will continue to be so in future to be honest.

http://i53.photobucket.com/albums/g7..._S_H/cable.jpg


Given the above chart from our friends at UBS, the current level is not at all indicative of a 'pathetic pound' I think you will agree.