G B Pound Falls To All-time Euro Low

[LaoPo]

Pound falls to all-time Euro low

The pound has touched a fresh all-time low against the euro, hit by market expectations that the Bank of England will further cut UK interest rates.

The falling value of the Pound

The pound's weakness is expected to hit UK holidaymakers this summer

With the Bank widely tipped to trim rates to 5% from 5.25% on Thursday, one pound was worth as little as 1.2500 euros in early Wednesday trading.

Sterling later strengthened slightly, with one pound worth 1.2552 euros.

Interest rate cuts generally encourage investors to switch to other currencies that have a higher rate of return.

The falling pound

While the pound went as low as 1.2500 euros, conversely the European single currency touched as high as 80 pence.

Commentators say British holidaymakers are likely to notice the pound's weakness when they go on their 2008 summer holidays to eurozone nations such as Spain, France and Portugal.

The Bank of England is widely expected to cut rates on Thursday to ease growing economic and consumer jitters caused by the impact of the global credit squeeze.

Against the dollar, the euro was up slightly to $1.5710, while one pound was worth $1.9718.

From: http://news.bbc.co.uk/2/hi/business/7338792.stm

GBP versus THAI BAHT charts:

One month GBP v Thai Baht

Three months GBP v Thai Baht

Twelve months GBP v Thai Baht

From: http://newsvote.bbc.co.uk/2/shared/fds/hi/...welve_month.stm

LaoPo

[AFKAFSinLOS]

Yes tough times to come for GBP. Using onshore rates it's down over 10% vs THB since its peak in mid Nov07.

This is what it looks like using the GBP/THB onshore rates. Source = BoT website taking mid of buy and sell. I think using the onshore rate gives an even clearer trend picture. It removes the liquidity distortions where the onshore/offshore rates diverged and converged.

Edited April 10, 2008 by AFKAFSinLOS

[AFKAFSinLOS]

As expected, and as per your OP Lao Po, UK cut and Europe held rates. Doesn't look good prospects for the GBP short to mid term

Let's see if anything interesting comes out of the G7.

[dee123]

....and Gordons popularity has never been so low too,....GO GORDON GO ya miserable git...

[LaoPo]

....and Gordons popularity has never been so low too,....GO GORDON GO ya miserable git...

Is he blamed (by the Brits) for the current problems ? I mean he's not even a year in office, but I don't want to judge him -yet-.

LaoPo

Edited April 10, 2008 by LaoPo

[cophen]

Don't forget he was the Chancellor for the Exchequer (Finance Minister) for 10 years before he became PM.

[dee123]

....fantastic Chancellor ,...but Blair and co had to squeeze every penny out of him that they could ,....but there are some things that you can trace back to Browns stinginess that have been shown to cause problems later,....he for instance has just rushed through welfare reforms and hired American co UNUM who are advising DWP,...dealing with disability benefit etc,....these bastards UNUM were ordered to pay heavy fines in the USA for deliberately denying disabled applicants their rightful benefits by delaying tactics puposefully making them default ,it saved millions of Dollars but absolutely diabolical practice ,associating and hiring UNUM to do the same in UK is vile...they sponsored Labour Party Conference ....similar stories are now appearing in UK.... BBC report said.....and of course the lack of armour for British soldiers can be traced back to Brown,...Its only recently been realised the mass immigrant influx into the the UK isn't making any of the "British People"better off as you have to take into account the cost of national health service to these new arrivals and the top earners (big bosses of multinationals etc) pay no tax through Tax loopholes and so the rich are getting richer the poor getting poorer,.....great idea Gordon now its time to share,.....GRRRRR!

Edited April 10, 2008 by dee123

[dee123]

...the British economy is going to be harder hit than others as we are the financial centre/or ideas centre of the world basically thats all we have no mass natural resources so this credit crunch is going to hurt UK one way or another...and I can see Brown folding under pressure,....its usually the case he doesn't bother turning up for meetings but sits in his office biting his nails,....thats not leadership far from it,...the mood in the UK at moment is very negative amongst working class people and Browns Goverment are in for a hiding in the elections unless he is removed......Labour voters are stirring for change myself included I voted for Blair and John Reed who I classed as "Heavyweight politicians" but end up with Brown and Jacqui Smith who are born "Followers"

Edited April 10, 2008 by dee123

[LaoPo]

Bank of England Lowers Rate to 5% on Recession Risk..............(Iceland raised benchmark rate to record 15.5%...see below)

April 10 (Bloomberg) -- The Bank of England cut the benchmark interest rate for the third time since December as higher credit costs and the worst housing slump in 16 years threatened to push the economy into a recession.

The Monetary Policy Committee, led by Governor Mervyn King, lowered the bank rate by a quarter point to 5 percent, as predicted by 52 of 61 economists in a Bloomberg News survey. The rest forecast that it would remain at 5.25 percent. The European Central Bank kept its benchmark rate at 4 percent today.

Former Chancellor of the Exchequer Nigel Lawson said yesterday Britain is headed for a ``prolonged'' recession as the seizure in credit markets prompts banks to choke off the cheap loans that fueled a decade-long boom in consumer spending. The slowdown has encouraged policy makers to keep up the pace of rate cuts and set aside concerns about inflation, which reached a nine- month high in February.

``Credit conditions have tightened and the availability of credit appears to be worsening,'' the Bank of England said in a statement today. Slower economic growth this year ``should help to keep domestic inflationary pressures in check.''

The pound was little changed after the decision at 80.27 pence per euro. The currency has dropped 19 percent against the single European currency since September after investors reined in their growth estimates for the U.K. economy. It fell to a record 80.29 pence earlier today.

Recession Risk

At 5 percent, the Bank of England's benchmark rate is still the highest among the Group of Seven industrialized nations.

``It was the right move,'' said Richard Lambert, director general of the Confederation of British Industry and a former MPC member, in an interview on Bloomberg Television. ``Credit conditions are deteriorating and getting tighter. They're trying to steer a middle course.''

The rate cut may still not be enough to prevent growth from deteriorating in coming months. The International Monetary Fund yesterday said U.K. growth will slow to 1.6 percent this year from 3.1 percent in 2007, the worst performance since the end of the last recession in 1992.

``We are probably facing a recession of some sort in the western world,'' Lawson, who served as finance minister from 1983 to 1989, said in an interview. ``Not a severe recession, but in the U.S. and U.K. one that might be quite prolonged.''

DSG International Plc, the biggest U.K. consumer electronics retailer, said today earnings may drop 32 percent this year amid ``challenging'' business conditions. House prices declined 2.5 percent in March from a month earlier, the biggest drop since 1992, mortgage lender HBOS Plc said April 8.

U.S. Contagion

U.K. growth is slowing after contagion from the U.S. subprime mortgage market slump spread. The IMF predicts the crisis will cause $945 billion in losses, and with banks reluctant to lend, the Bank of England is struggling to steer mortgage borrowing costs with its benchmark rate.

``The credit crunch has been with us for eight months and isn't getting any better,'' said Geoffrey Dicks, an economist at Royal Bank of Scotland Group Plc, which predicts the central bank will cut its rate to 4.5 percent by February. ``The Bank of England has to steer a course between inflation and the real economy. It's not easy.''

Prime Minister Gordon Brown, whose reputation for economic competence is threatened by the housing slump, has indicated that price pressures aren't strong enough to stand in the way of action by the Bank of England to help the economy.

Brown's Problem

Brown helped extend the economy's longest period of uninterrupted growth for two centuries during his 10 years as finance minister. Still, a poll by Populus Ltd. on April 8 showed his approval rating fell to the lowest since he succeeded Tony Blair in June.

``While it hasn't been the government's fault, the economy is very quickly becoming the government's problem.'' Rick Nye, a political analyst at Populus, which conducts opinion polls for the Times of London, said in a Bloomberg interview.

The world's central banks are responding differently to the credit crisis, which comes as higher food and oil prices stoke inflation. The U.S. Federal Reserve has lowered its key rate 3 percentage points since September to 2.25 percent, while the ECB has refused to cut borrowing costs since markets seized up in August because inflation is above its ceiling.

Iceland's central bank today unexpectedly raised its benchmark rate to a record 15.5 percent to shore up the krona and damp inflation that is running at three times the target.

The Bank of England said today that commodity prices could raise price expectations and keep inflation above the central bank's 2 percent target. Consumer prices rose 2.5 percent in February from a year earlier after gas and electricity prices rose. Oil prices climbed to a record $112.21 a barrel in New York yesterday.

``They will ultimately be cutting rates more aggressively,'' James Shugg, a U.K. economist at Westpack Banking Corp., said in a Bloomberg Television interview in London. ``There is more bad news to come. They're being cautious because of the short term inflation risks. We're looking for another three cuts.''

---Bloomberg

LaoPo

[dee123]

.....gas up,petrol up,food up,council tax up, ,but my wages ain't up,....the city had record bonuses last year so there allright,....but what about the rest of us....now its time to test your "social justice" credentials Gordon,......Gordon,.....GORDON !!

Edited April 10, 2008 by dee123

[RAZZELL]

But what do the politician's care with their fat-cat salaries, "expenses", second-homes and plasma TV's paid for by the tax-payer?

In the words of Ed Balls "So What?"

The chickens are coming home to roost...

Mark my words...If the weather's hot this summer...they'll be trouble on the streets

RAZZ

Edited April 11, 2008 by RAZZELL

[LaoPo]

Pound Falls to Record Against Euro on Speculation of Rate Cuts

By Lukanyo Mnyanda

April 11 (Bloomberg) -- The pound fell to a record against the euro for a fourth day on bets the Bank of England will keep cutting interest rates as economic growth slows, eroding the allure of U.K.-denominated assets.

The pound posted weekly declines versus the euro and dollar after industry reports showed house prices and consumer confidence declined. UBS AG, Europe's largest bank, revised its U.K. interest-rate forecast today, predicting four more reductions this year, after policy makers yesterday cut for the third time since December. The European Central Bank kept its main rate at a six-year high.

``The U.K. economy is clearly slowing and there are risks it could slow sharply,'' said Paul Robinson, a currency strategist at Barclays Plc in London and a former Bank of England economist. ``The pound is going to remain at low levels against the euro.''

The pound dropped to 80.38 pence per euro, the lowest level since the common currency's 1999 inception, and was at 80.15 pence by 5:02 p.m. in London, from 79.87 pence yesterday. It declined 1.6 percent this week and 9 percent this year. The pound will hold around 79 pence in the next month, Robinson forecast.

Britain's currency was little changed at $1.9704, from $1.9707, posting a 1.1 percent weekly drop. It fell to 199.25 yen, from 200.92 yen yesterday, after slipping 1.5 percent since April 4.

The pound fell versus all but three of the 16 major currencies tracked by Bloomberg this week.

Continues here:

http://www.bloomberg.com/apps/news?pid=206...jg&refer=uk

LaoPo

[Brigante7]

...the British economy is going to be harder hit than others as we are the financial centre/or ideas centre of the world basically thats all we have no mass natural resources so this credit crunch is going to hurt UK one way or another...and I can see Brown folding under pressure,....its usually the case he doesn't bother turning up for meetings but sits in his office biting his nails,....thats not leadership far from it,...the mood in the UK at moment is very negative amongst working class people and Browns Goverment are in for a hiding in the elections unless he is removed......Labour voters are stirring for change myself included I voted for Blair and John Reed who I classed as "Heavyweight politicians" but end up with Brown and Jacqui Smith who are born "Followers"

People who voted Labour or didn't vote at all have no right to complain about the state of the country.

[tijnebijn]

Do not understand why the Brits are not willing to switch the Pound Sterling

into the Euro . If the Germans were willing why not the Brits ......

Don't be surprised to see the Euro - Pound 1:1 .