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View Full Version : Why is the pound taking a beating from the euro all of a sudden?



scooterscot
19th July 2010, 16:18
My day rate just keeps climbing :happy

doodab
19th July 2010, 16:36
I'm not sure. I assume the markets think the British economy is pretty stuffed.

The € was doing badly for a while because of the worries about eurozone banks holding dodgy government debts but those worries seem to have passed, even the recent downgrades to Ireland and Spain don't seem to have had much impact, so I suppose those earlier falls are reversing. It's still weaker against the pound than it was at the start of the year though, so we could have more to come.

Parity by Christmas anyone?

scooterscot
19th July 2010, 16:44
Last week we were seeing 1.22 € to the £ now it's 1.175 today.

Parity sounds great, in theory, when working in euroland but at the same time I've assets back home and if the £ keeps falling the pressure to increase interest rates grows.

doodab
19th July 2010, 16:56
But we had €1.09 to €1.10 a few months ago.

I think the MPC will be more concerned with runaway inflation. A weakening pound is going to help exports, although it might make it harder to fund the defecit they can always sell euro denominated bonds :laugh

Doggy Styles
19th July 2010, 21:27
Did you consider that you losing money earlier in the year when the euro hit the rocks? :wink

It's all froth. It's been lower, and it's been higher.

NoddY
20th July 2010, 17:29
ECB: Euro exchange rates GBP (http://www.ecb.int/stats/exchange/eurofxref/html/eurofxref-graph-gbp.en.html)

Click on "All" to see what Northern Rock and Lehmans caused.

Mich the Tester
20th July 2010, 17:40
The € was doing badly for a while because of the worries about eurozone banks holding dodgy government debts but those worries seem to have passed, even the recent downgrades to Ireland and Spain don't seem to have had much impact, so I suppose those earlier falls are reversing. It's still weaker against the pound than it was at the start of the year though, so we could have more to come.
The biggest economies in Euroland are nothing like as stuffed as Greece and Spain; even Italy isn't as buggered as some people think; as soon as sales of cars and white goods improve, the Italians start making money again. Greece is a tiny economy compared to the big economies like France, Germany and Italy, all of whom aren't doing as badly as was expected. Benelux is OK thanks to reasonably sensible fiscal policies. If you downgrade the euro because you think eurolands sovereign debt is a problem, you're automatically losing out on the chance of very long term very safe investment in German, Dutch, Belgian and Luxurybourg gilts; all those countries have very solid reputations and actually form a larger chunk of the euroland economy than all the olive oil countries together. Ireland seems to be getting it's act together on the fiscal side, and I've heard that the economy there is at least showing signs of not getting any worse.

Sysman
20th July 2010, 18:56
The biggest economies in Euroland are nothing like as stuffed as Greece and Spain; even Italy isn't as buggered as some people think; as soon as sales of cars and white goods improve, the Italians start making money again. Greece is a tiny economy compared to the big economies like France, Germany and Italy, all of whom aren't doing as badly as was expected.

Speaking of Greece, on the train home tonight I read a headline that Greek civil servants have until the middle of the week to describe what their jobs entail, and if they don't they lose their pay.

Sounds a good idea to me.

centurian
20th July 2010, 21:09
I think the MPC will be more concerned with runaway inflation.

As in "concerned" on how to sustain it - can't see any other way of getting rid of the debt, other than to inflate it away, so we only end up repaying a day's worth of GDP.

milanbenes
21st July 2010, 08:41
The biggest economies in Euroland are nothing like as stuffed as Greece and Spain; even Italy isn't as buggered as some people think; as soon as sales of cars and white goods improve, the Italians start making money again. Greece is a tiny economy compared to the big economies like France, Germany and Italy, all of whom aren't doing as badly as was expected. Benelux is OK thanks to reasonably sensible fiscal policies. If you downgrade the euro because you think eurolands sovereign debt is a problem, you're automatically losing out on the chance of very long term very safe investment in German, Dutch, Belgian and Luxurybourg gilts; all those countries have very solid reputations and actually form a larger chunk of the euroland economy than all the olive oil countries together. Ireland seems to be getting it's act together on the fiscal side, and I've heard that the economy there is at least showing signs of not getting any worse.


Mich,

very nicely put.

Reading the FT on the plane on the last few flights to work, sounds like Germany is turning the corner, manufacturing numbers are up up up, factories are taking people off short time working and even getting their temp numbers back up. Same goes for CZ infact the two from a manufacturing perspective are inextricably linked.

As we all know, manufacturing is the foundation stone of sensible economies, and once the manufacturing wheels start turning again, then slowly but surely the rest will pick up - so this is very good news.

Milan.

AlfredJPruffock
21st July 2010, 08:58
Aye Milan

The main reason is that the markets have balked at the recent annouecments from the US that economic recovery could be some years away - when the dollar falls Sterling tends to fall as well - altough I predict it will be back at 1.20 by the end of August.

milanbenes
21st July 2010, 09:13
Aye Milan

The main reason is that the markets have balked at the recent annouecments from the US that economic recovery could be some years away - when the dollar falls Sterling tends to fall as well - altough I predict it will be back at 1.20 by the end of August.



Aye Alf,

another thing, the Euro falling all round about 15% two months ago has helped a lot too.

In an exporting region like mainland Europe you can't beat a weak currency.

Milan.

AlfredJPruffock
21st July 2010, 15:01
Aye Alf,

another thing, the Euro falling all round about 15% two months ago has helped a lot too.

In an exporting region like mainland Europe you can't beat a weak currency.

Milan.

Aye Milan


But you should heed the Good Word

Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal.

But lay up for yourselves treasures in heaven, where neither moth nor rust spoils, and where thieves do not dig through nor steal; for where thy treasure is, there will be also thy heart.

PM-Junkie
21st July 2010, 16:39
It's not even nearly over yet - Spain is going to cause huge problems for the Eurozone. People seem to have forgotten that Spain was screwed even before the downturn.

It's going to get messy...

milanbenes
21st July 2010, 16:52
Aye Milan


But you should heed the Good Word

Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal.

But lay up for yourselves treasures in heaven, where neither moth nor rust spoils, and where thieves do not dig through nor steal; for where thy treasure is, there will be also thy heart.


thank you Alf,

there are many more good words where those words came from which we should all heed

Milan.

SupremeSpod
21st July 2010, 17:14
thank you Alf,

there are many more good words where those words came from which we should all heed

Milan.

Ya grovelling wee bastid!

Mich the Tester
21st July 2010, 18:23
Aye Milan


But you should heed the Good Word

Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal.

But lay up for yourselves treasures in heaven, where neither moth nor rust spoils, and where thieves do not dig through nor steal; for where thy treasure is, there will be also thy heart.
For.....I'm just a country boy
Money have I none
But I've got silver in the stars
And gold in the morning sun
And gold in the morning sun

I like Don Williams' version.