£ Sterling Up Sh*t Creek?

[Prakanong]

Queen of all currencies ???

except Brits, nobody cares about the GBP ... not even a little bit !

I see you are totally in tune with the world economy and interbational financial system

Stick to playing with the internet and spamming or whatever low level activity you do!.

[Naam]

Queen of all currencies ???

except Brits, nobody cares about the GBP ... not even a little bit !

shame on you! my thoughts are the same but do we have to insult our british friends instead of politely hiding what we think?

[Naam]

see what you did? now you made Prakanong angry!

[Prakanong]

see what you did? now you made Prakanong angry!

Why - I have not been paid in GBP since 2001

And who really cares what a mickey mouse web gut from Phuket thinks anyway - have you seen the slave wages he offers his Thai staff

[chiang mai]

Queen of all currencies ???

except Brits, nobody cares about the GBP ... not even a little bit !

[jackr]

Queen of all currencies ???

except Brits, nobody cares about the GBP ... not even a little bit !

Tit! Why bother? I'm sure you're not that cynical when spamming all n sundry, pleading for your little PR3s

[LivinLOS]

Dont forget the GBP is paying about 6% interest currently (I think I get 5.9? on one account but dont keep much GBP) so as such sterling may be being given an artificial boost thanks to yen carry trade investing..

Should yen carry unwind dramatically (and I think it will) and the yen boost then sterling could take a whack due to that factor.

[stevemiddie]

Now we shall see what we can see Middie man!

http://en.wikipedia.org/wiki/Economy_of_the_United_Kingdom

You seem to think I'm pessimistic about the £? How wrong you are middie!

That link looks reasonable to me. Its hardly a pessimistic article.

So what part of this article are we supposed to read to confirm your views huh?

[stevemiddie]

As we are typing he is probably desperately looking online for ANYTHING that will slightly agree with his doom mongering.

A link like.............( Sterling drops by 3 SATANG..................crisis! 1974 )

Tee hee hee

Maybe you should stop posting sarcastic comments and start looking a bit harder then. Bloomberg news has a large peice on this. They quote quite a few well respected sources confirming these fears.

Maybe you need to look at other newsworthy articles on CNN.........BBC World and the Financial Times.

Wasn,t it Bloomersberg that were stating that oil WILL hit $100 a barrell THIS year? Guess they got that wrong huh?

Fears? Market corrections......happens all the time.

Edited December 18, 2007 by stevemiddie

[xyborg]

<br />

As we are typing he is probably desperately looking online for ANYTHING that will slightly agree with his doom mongering. <br /><br />A link like.............( Sterling drops by 3 SATANG..................crisis! 1974 )<br /><br />Tee hee hee

<br /><br />Maybe you should stop posting sarcastic comments and start looking a bit harder then. Bloomberg news has a large peice on this. They quote quite a few well respected sources confirming these fears.<br />

<br /><br />Maybe you need to look at other newsworthy articles on CNN.........BBC World and the Financial Times. <br />Wasn,t it Bloomersberg that were stating that oil WILL hit $100 a barrell THIS year? Guess they got that wrong huh? <br /><br /><br />Fears? Market corrections......happens all the time.<br />

<br /><br /><br />

I can predict oil will be $500 a barrell as the stuff is running out.

[chiang mai]

I'm not sure how useful it is to follow the commentaries in the FT or on CNN etc when it comes to currency trends and forecasts, they will inevitably be able to spot some looming headline moves but as far as a reliable forecast into the medium term is concerned, it's doubtful. Fact is that if those commentators were good at that kind of stuff the headlines in every financial newspaper would read, "Dump Sterling Now" and everyone would feel a lot better. As others have already pointed out the only reasonably safe approach to all of this is to have diversified and spread the risk across a range of currencies and investment types.

Have to say however that the chartists out there did identify the current trend many months ago so credit to them. But in looking forward, what to expect. For me historic values hold a key so when the poor guy in the Phuket Gazette suggests 50 to GBP I suspect he may not be too far off the mark and my point of reference here is the fact that THB was 35 per GBP for quite a while. When oil was $50 a barrel the concept of $100 was unthinkable and when USD/GBP was 1.60 the idea of 2.10 was pretty far fetched yet both materialized relatively quickly.

[naka]

So the OP uses a TV poll and the Phuket Gazette as his primary investment strategy

Naka.

[chiang mai]

So the OP uses a TV poll and the Phuket Gazette as his primary investment strategy

Naka.

In the absence of anything better it's probably not a bad place to start to raise self awareness of the issue. How many ex pats in Thailand do you imagine have sat down with the people who are properly skilled and qualified to do a good quality investment and risk strategy for their financial life in Thailand AND then adopted it and stuck to it? I imagine less than 5%.

[naka]

So the OP uses a TV poll and the Phuket Gazette as his primary investment strategy

Naka.

In the absence of anything better it's probably not a bad place to start to raise self awareness of the issue. How many ex pats in Thailand do you imagine have sat down with the people who are properly skilled and qualified to do a good quality investment and risk strategy for their financial life in Thailand AND then adopted it and stuck to it? I imagine less than 5%.

Oh dear me.

Naka.

[chiang mai]

As we are typing he is probably desperately looking online for ANYTHING that will slightly agree with his doom mongering.

A link like.............( Sterling drops by 3 SATANG..................crisis! 1974 )

Tee hee hee

Maybe you should stop posting sarcastic comments and start looking a bit harder then. Bloomberg news has a large peice on this. They quote quite a few well respected sources confirming these fears.

Maybe you need to look at other newsworthy articles on CNN.........BBC World and the Financial Times.

Wasn,t it Bloomersberg that were stating that oil WILL hit $100 a barrell THIS year? Guess they got that wrong huh?

Fears? Market corrections......happens all the time.

Given that Bloombergs made that estimate when oil was at $76, the fact that it reached $97 makes $100 a pretty good call I'd say.

[chiang mai]

Here's what Bloomberg has to say today about Sterling, for those in doubt about a GBP fall:

Pound Peak Fuels Pessimism as Currency Mimics Dollar (Update4)

Dec. 17 (Bloomberg) -- Just a month after rising to a 26- year high against the dollar, the British pound is starting to look more like the beleaguered U.S. currency.

The pound weakened against 10 of the world's 16 most actively traded currencies since reaching $2.1161 on Nov. 9. In the U.K., just as in the U.S., policy makers are cutting interest rates to restore calm in credit markets and home prices are declining.

``When we look at economies around the world which are exposed to similar problems as in the U.S., the U.K. is pretty high on our list,'' said Andrew Balls, a global bond fund manager at Newport, California-based Pacific Investment Management Co., which oversees $721 billion. ``Sterling is a good currency to sell.''

The pound depreciated 3.3 percent to $2.0174 after reaching the highest level since May 1981 and fell for a third straight week. It weakened 11 percent versus the Canadian dollar this year and 5.4 percent against the euro. The dollar lost 7.8 percent this year on a trade-weighted basis against a basket of six currencies that make up the Fed's U.S. Dollar Index. It reached a record low in November.

Strategists say there's more pain in store for the pound. Zurich-based UBS AG and Frankfurt-based Deutsche Bank AG, the world's biggest foreign-exchange traders, predict the currency will weaken at least 6 percent against the dollar in 2008. Pimco, a unit of Munich-based insurer Allianz SE, New York-based Merrill Lynch & Co. and Goldman Sachs Group Inc. say sterling may be overvalued by as much as 25 percent, based on the level of trading done between the U.K. and the U.S., and prices for the same goods in the countries.

Housing Prices

The Bank of England cut its benchmark rate by a quarter percentage point to 5.5 percent on Dec. 6, as the U.K. confronts the contagion to housing markets that forced the U.S. Federal Reserve to reduce borrowing costs three times since September.

The difference between the London interbank offered rate that banks charge each other for three-month loans and the central bank's target is hovering near the widest this decade, a sign that financial institutions remain skittish about lending to each other.

In the U.K., house prices fell for a third consecutive month in November, the longest slump since 1995, HBOS Plc, the U.K.'s biggest mortgage lender, said Dec. 5. Values, which tripled since 1997, may decline as much as 10 percent in 2008, according to David Miles, an economist at Morgan Stanley in New York. Median home prices declined in the U.S. this year, the first annual drop since the Great Depression, according to forecasts from the National Association of Realtors in Washington.

`Standout Underperformer'

The U.K. economy will expand 2 percent next year, down from 3.1 percent in 2007, according to the median estimate of 15 economists surveyed by Bloomberg. A separate survey showed growth in the U.S. will increase to 2.3 percent in 2008 from 2.2 percent this year.

The pound ``will be the standout underperformer next year,'' said Ian Stannard, a senior currency strategist at BNP Paribas SA in London who expects sterling to fall to $1.83. ``The housing market looks as if it is falling off a cliff. Sterling is now going to fall quite sharply.''

The U.K.'s currency will drop to $1.94 by the end of next year, according to the median estimate of 42 firms surveyed by Bloomberg. Goldman Sachs and Royal Bank of Scotland Group Plc in Edinburgh say selling the pound versus Japan's yen is one of their top 10 recommendations for 2008.

Pimco's Trades

Pimco set up trades last month to profit from a decline in the pound against Asian currencies such as the Korean won and the Singapore dollar, Balls said. Singapore's currency rose 3.69 percent against sterling in the past three months and the won dropped 0.59 percent.

Futures show traders expect the Bank of England will lower its target rate to 5 percent by the end of 2008, while Pimco and Zurich-based UBS say it will drop to at least 4.5 percent. The Fed will cut U.S. rates a quarter point to 4 percent during the same period, according to the median estimate of economists surveyed by Bloomberg on Dec. 11.

Lower rates may make U.K. financial assets less attractive to international investors, putting more pressure on the pound.

``We have seen our clients covering or actually exiting their long positions on the pound,'' said Alina Anishchanka, a currency strategist at UBS in London. ``The pound will definitely suffer.''

Risk Reversal

The difference between two-month pound calls, which provide the right to buy the currency, and puts, which allow for sales, fell to minus 1.3 percentage points on Dec. 13. The so-called risk reversal rate, used as an indicator of sentiment in the foreign-exchange market, shows traders are more bearish on sterling than at any time since October 2003, data compiled by Bloomberg show.

Some traders say the pound rally will resume. Faster inflation and economic growth may keep the Bank of England from lowering borrowing costs as fast as the Fed. U.K. rates are the highest among the Group of Seven nations. The economy has expanded for 61 straight quarters.

``I'm a little surprised about all the negative calls on the pound because, in many ways, the support from the U.K. economy is still there,'' said Dale Thomas, head of currencies at Insight Investment Management in London, which oversees about $121 billion. ``I'm long the pound against the dollar.''

`Rather Uncomfortable'

The U.K. unemployment rate fell to its lowest since 1975 in November, government figures show. The falling pound may prompt faster inflation by increasing import costs, weakening the case for further rate cuts. The pace of consumer price increases in October exceeded the Bank of England's 2 percent target for the first time in four months.

Bank of England Governor Mervyn King, wary of how much longer the labor market will hold up, called the short-term outlook ``rather uncomfortable,'' in comments to Parliament's Treasury Select Committee in London Nov. 29.

U.K. financial institutions have been caught in the fallout from record defaults among subprime borrowers, writing down more than 3.7 billion pounds ($7.5 billion) this quarter. In September, Newcastle-based Northern Rock Plc had to be bailed out by the Bank of England after it was unable to raise debt financing.

David Woo, head of currency strategy in London at Barclays Capital Inc., part of Barclays Plc, predicted the pound will be among the worst-performers next year because of the housing turmoil and its fallout on consumers.

Mortgage Costs

Mortgage-interest costs consumed 20.6 percent of first-time buyers' incomes in October, the most since 1991, according to London-based Council of Mortgage Lenders. Consumer confidence fell to the lowest since at least 2004 last month, according to a Dec. 5 report compiled by Nationwide Building Society, Britain's fourth-biggest mortgage lender.

``Mortgage debt as a share of disposable income is even higher in the U.K. than in the U.S. and the country has an even more over-valued housing market,'' Woo said. ``The twin pillars of the U.K. economy, housing and banking, are coming under further pressure.''

[howtoescape]

Mortgage-interest costs consumed 20.6 percent of first-time buyers' incomes in October, the most since 1991, according to London-based Council of Mortgage Lenders. Consumer confidence fell to the lowest since at least 2004 last month, according to a Dec. 5 report compiled by Nationwide Building Society, Britain's fourth-biggest mortgage lender.

``Mortgage debt as a share of disposable income is even higher in the U.K. than in the U.S. and the country has an even more over-valued housing market,'' Woo said. ``The twin pillars of the U.K. economy, housing and banking, are coming under further pressure.''

I cant see the property market crashing, there is under supply which isnt the case in the states, the reason for the last crash was that interest rates went up to 15% that just isnt going to happen.

The population is rising and they arent building houses any more.

[chiang mai]

Mortgage-interest costs consumed 20.6 percent of first-time buyers' incomes in October, the most since 1991, according to London-based Council of Mortgage Lenders. Consumer confidence fell to the lowest since at least 2004 last month, according to a Dec. 5 report compiled by Nationwide Building Society, Britain's fourth-biggest mortgage lender.

``Mortgage debt as a share of disposable income is even higher in the U.K. than in the U.S. and the country has an even more over-valued housing market,'' Woo said. ``The twin pillars of the U.K. economy, housing and banking, are coming under further pressure.''

I cant see the property market crashing, there is under supply which isnt the case in the states, the reason for the last crash was that interest rates went up to 15% that just isnt going to happen.

The population is rising and they aren't building houses any more.

That's just part of the picture on the Sterling front but to add to it, try looking at the commercial real estate funds and the extreme rate at which they are being abandoned - they used to be a basic building brick in the IFA's bag of tools but, no longer.

[the gent]

Mortgage-interest costs consumed 20.6 percent of first-time buyers' incomes in October, the most since 1991, according to London-based Council of Mortgage Lenders. Consumer confidence fell to the lowest since at least 2004 last month, according to a Dec. 5 report compiled by Nationwide Building Society, Britain's fourth-biggest mortgage lender.

``Mortgage debt as a share of disposable income is even higher in the U.K. than in the U.S. and the country has an even more over-valued housing market,'' Woo said. ``The twin pillars of the U.K. economy, housing and banking, are coming under further pressure.''

I cant see the property market crashing, there is under supply which isnt the case in the states, the reason for the last crash was that interest rates went up to 15% that just isnt going to happen.

The population is rising and they arent building houses any more.

This almost Malthusian view of the domestic UK property market cannot be supported by the reality currently unveiling itself to the average Brit consumer unless of course one were to listen to the vested interests of the deluded although even the dimmest estate agent now realises that sentiment can no longer be propped up by spouting nonsense.

Their is no shortage of housing per se but there is a dearth of affordable property if a prospective buyer earns an average income and declines to leverage himself to the point of financial suicide. Now that the subprime tap has been turned off it will only be a matter of time before the market restores itself to equilibrium whereupon the average buyer can return. At present the market is in hiatus with sellers yet to comprehend this shift and have priced themselves unrealistically to the point that very little is now selling and for sale boards are proliferating everywhere. The Buy to Let sector that speculated upon new build apartments throughout cities in the Midlands and the North is particularly vulnerable with typical losses amounting to up to 50% whenever they can be offloaded. In fact, thousands are currently empty and those holding amateur portfolios are inevitably facing bankruptcy. Repossessions are currently estimated to double within a year to a number far in excess of that experienced in the last crash of 91-95.

Essentially, the crash has already started and like all crashes before it will be a long drawn out affair.

The only issue of real interest yet to be resolved is which way will the Golden Clown jump. Accept the forthcoming recession for the inevitable it is and maintain interest rates a la Paul Volcker or trash the pound and hope the debt driven consumer frenzy of the past 3 years can be extended until after the next election. Reducing the interest rate this month suggests he would be happy with the latter.

Edited December 18, 2007 by the gent

[lannarebirth]

FWIW. this past week has seen a repricing of the future value of the GBP:USD March contract. A week ago the March contract had a premium over present value. Today the contract trades at a discount to present vale

[PCA]

FWIW. this past week has seen a repricing of the future value of the GBP:USD March contract. A week ago the March contract had a premium over present value. Today the contract trades at a discount to present vale

thats always before contract rollover, nothing unusual here.

[lannarebirth]

FWIW. this past week has seen a repricing of the future value of the GBP:USD March contract. A week ago the March contract had a premium over present value. Today the contract trades at a discount to present vale

thats always before contract rollover, nothing unusual here.

Are you saying you can short out month currency contracts with impumity during triple witching week?

[PCA]

FWIW. this past week has seen a repricing of the future value of the GBP:USD March contract. A week ago the March contract had a premium over present value. Today the contract trades at a discount to present vale

thats always before contract rollover, nothing unusual here.

Are you saying you can short out month currency contracts with impumity during triple witching week?

dont understand your question. What are you talking about? The december contract expired and the march contract is spot now. The rollover occurs during the last few days before expiration of the december contract. They are never trading at the same price and you can play calendarspreads with them though its useless with the same currency.

[lannarebirth]

FWIW. this past week has seen a repricing of the future value of the GBP:USD March contract. A week ago the March contract had a premium over present value. Today the contract trades at a discount to present vale

thats always before contract rollover, nothing unusual here.

Are you saying you can short out month currency contracts with impumity during triple witching week?

dont understand your question. What are you talking about? The december contract expired and the march contract is spot now. The rollover occurs during the last few days before expiration of the december contract. They are never trading at the same price and you can play calendarspreads with them though its useless with the same currency.

Here's the chart of the spot price:

http://stockcharts.com/h-sc/ui?s=$XBP...&a=57556928

I'm not sure how to do a screen caprure, but the BPH8 is trading 55 ticks lower. It had beeen trading well over a point higher a couple of days ago and not at a discount anytime recently. It suggests a possible trend change, though it may be bottoming ST soon.

Edited December 18, 2007 by lannarebirth

[PCA]

FWIW. this past week has seen a repricing of the future value of the GBP:USD March contract. A week ago the March contract had a premium over present value. Today the contract trades at a discount to present vale

thats always before contract rollover, nothing unusual here.

Are you saying you can short out month currency contracts with impumity during triple witching week?

dont understand your question. What are you talking about? The december contract expired and the march contract is spot now. The rollover occurs during the last few days before expiration of the december contract. They are never trading at the same price and you can play calendarspreads with them though its useless with the same currency.

Here's the chart of the spot price:

http://stockcharts.com/h-sc/ui?s=$XBP...&a=57556928

I'm not sure how to do a screen caprure, but the BPH8 is trading 55 ticks lower. It had beeen trading well over a point higher a couple of days ago and not at a discount anytime recently. It suggests a possible trend change, though it may be bottoming ST soon.

what you chart here is the Index and not a futures contract. March is the front month now where the volume is and where the music plays. By the way I am short since last tuesday and hope your colourful trendline doesnt stop the market to plunge to my target at 1.90.

Cheers

[lannarebirth]

FWIW. this past week has seen a repricing of the future value of the GBP:USD March contract. A week ago the March contract had a premium over present value. Today the contract trades at a discount to present vale

thats always before contract rollover, nothing unusual here.

Are you saying you can short out month currency contracts with impumity during triple witching week?

dont understand your question. What are you talking about? The december contract expired and the march contract is spot now. The rollover occurs during the last few days before expiration of the december contract. They are never trading at the same price and you can play calendarspreads with them though its useless with the same currency.

Here's the chart of the spot price:

http://stockcharts.com/h-sc/ui?s=$XBP...&a=57556928

I'm not sure how to do a screen caprure, but the BPH8 is trading 55 ticks lower. It had beeen trading well over a point higher a couple of days ago and not at a discount anytime recently. It suggests a possible trend change, though it may be bottoming ST soon.

what you chart here is the Index and not a futures contract. March is the front month now where the volume is and where the music plays. By the way I am short since last tuesday and hope your colourful trendline doesnt stop the market to plunge to my target at 1.90.

Cheers

I'm short as well with the same initial target.

[torrenova]

Right lets nail this crap once and for all. Go see the forward curve for GBP/THB. Look out to 10 years and tell me what you see ? Then get some prices for cross currency swaps and see what that gives you going out say a few months to a few years.

If you see Bt50 to £1 then give me a call as I want to know where you see that. Not on my screens I don't.

[englishoak]

The only issue of real interest yet to be resolved is which way will the Golden Clown jump. Accept the forthcoming recession for the inevitable it is and maintain interest rates a la Paul Volcker or trash the pound and hope the debt driven consumer frenzy of the past 3 years can be extended until after the next election. Reducing the interest rate this month suggests he would be happy with the latter

Sadly I agree.

[fletchsmile]

Interesting topic. The main omission to me seems to be time frame. For most people on here I'd probably say if you can't cope with some significant GBP/THB fluctuations within a year you've got problems with the way you're managing your money. You should be able to get by for 1 year, whatever happens. Trading is a different matter. But there are few people I've seen on here would make a living as an FX trader, although people enjoy discussing FX.

Also, if you're planning on being here for a year, by all means plan with one year fluctuations. But in all likelihood, if you're only here a year, you won't really care too much. You'll be going somewhere else where you have assets in a different country, different job. etc Short term people get by and cope. It's the longer term that counts

For actual planning and forecasting, you need to be prepared to cope with how long your here for. Those with the idea of retiring or here for good or long term, should be looking at rates that have happened in say the last 25 years.

For those living on interest or thinking about it: You might be getting say 6% on your UK bank account now at nearly GBP/THB 70. Can you cope when interest rates halve? What about when the exchange rate halves? What happens when they both hit at the same time? For significant periods of time? Can you cope?

BTW For the person who asked on rates, I used 60-65-70 (3 rates) for budgeting over 2007, i.e one single year. Over longer time frames I use wider ranges. Over 25 years from now you might more realistically want to consider say 35-55-75 as low, med. high. Next year I would probably use 55-60-65 for 1 yr and same 35-55-75 for 25 years. I'd also keep an eye on 35 as a long term floor

Key is diversification across currencies and asset classes, for your timeframe and risk profile. Personally I hold about 40% GBP, 20% THB, 25% SGD, 15% other. I plan on being here long term, but always want the option of moving if need be. I'm not good enough to predict short/long term fluctuations accurately. Tho' prehaps better than many. Hence the diversification, and a few "what ifs" to ensure sleeping soundly.

Edited December 19, 2007 by fletchsmile

[JimsKnight]

I think the 50 mark is extremely pessimistic! The UK economy would have to be in skid row and on the verge of breakdown for that to happen.

Why is the 70 mark such a lofty amount to some of you masters of the universe? Why could it not climb to 80 or even 90 baht to the pound?

We still don't know what's around the corner in LOS let along the UK.