UK Pound Dipping.

[JaseTheBass]

thankfully they failed in the 90's when again they talked of economic ruin,if we did not join the Euro.

I'd rather Brussels was in control of the UK than the current government.

At least Brussels isn't trying to sell off everything to the private sector.

NHS, school land, Land Registry, all public land, public roads, all up for grabs now.

I don't care all that much about Muslims et al moving to the UK, but I do care about losing my money.

After Labour turing the UK into the largest socialist state and making it unable to pay for itself by having an untenable, bloated public sector, the currect government has no choice but to redress the balance and privatise various sectors.

You cannot have a public sector that is larger than the private sector, which is exactly what Labour left.

[sandyf]

With the Panama Papers, the TATA Steel issue and Airbus under investigation by the serious fraud people, a lot of questions need answers before June.

Not going to do a lot for the pound.

[BritManToo]

The single currency was an absolute necessity for cross border traffic and the people of Europe struggled for over 30 years to get that single currency introduced.

Longer than that, Germany made it's first attempt for a single currency in 1914, tried again in 1938, and finally succeeded in 2002.

In each case England refused to comply with the rest of Europe.

Edited April 5, 2016 by BritManToo

[colinchaffers]

What do you thibk the effect if we stay in EU? how much is the rate likly to climb too? 55?

[chiang mai]

What do you thibk the effect if we stay in EU? how much is the rate likly to climb too? 55?

The following article is worth reading, at the end it closes with, "what will happen if we don’t vote for Brexit, and the pound returns to its previously overvalued level".

Major emphasis on the word, "overvalued"!

http://www.telegraph.co.uk/business/2016/04/03/brexit-or-not-this-record-deficit-is-a-big-big-problem/

[sandyf]

The single currency was an absolute necessity for cross border traffic and the people of Europe struggled for over 30 years to get that single currency introduced.

Longer than that, Germany made it's first attempt for a single currency in 1914, tried again in 1938, and finally succeeded in 2002.

In each case England refused to comply with the rest of Europe.

If you want to include the pre war history, a lot changed in 1945.

The post war initiative was started in 1969, the euro named in 1995, introduced in 1999 and went public in 2002.

The Germans were in fact reluctant participants in the Euro with UK and Denmark refusing to join. Only 12 members in those days.

[losworld]

Maybe they are trying to get you used to the pos euro value when they bring Britain into the fold. If you guys are smart you will stay out imho.

[colinchaffers]

What do you think the THB/GBP will do if we stay in the EU? go up?

[colinchaffers]

What do you thibk the effect if we stay in EU? how much is the rate likly to climb too? 55?

The following article is worth reading, at the end it closes with, "what will happen if we don’t vote for Brexit, and the pound returns to its previously overvalued level".

Major emphasis on the word, "overvalued"!

http://www.telegraph.co.uk/business/2016/04/03/brexit-or-not-this-record-deficit-is-a-big-big-problem/

Very interesting ..... many thanks

[chiang mai]

Here's more confirmation (as if it were needed) of what is likely to happen to Sterling in the event of Brexit:

"Sterling slid against 15 of its 16 major peers. It erased a decline versus the dollar as a separate report showed the U.K. economy grew more than previously estimated at the end of 2015. On a trade-weighted basis, the U.K. currency posted its worst quarter since 2009 amid concern that if Britain votes to exit the European Union on June 23 it would hurt economic growth. A so-called Brexit could also make it harder for the nation to fund its current-account deficit with overseas investment".

http://www.bloomberg.com/news/articles/2016-03-31/pound-erases-decline-after-u-k-economy-grew-more-than-forecast

Trying to fund a record deficit is the issue when consumer spending is slowing and prices are falling, outside investment is likely to withdraw because of reduced confidence - interestingly London property prices are down by 10% for the first time.

BTW I don't write this stuff I just read it because I'm looking for answers the same as everyone else. Interestingly I haven't seen much yet written about likely scenarios if Brexit fails, other than the piece by Roger Bootle above, the deficit does however seem to be a key factor in that scenario.

[chiang mai]

It seems this man really is an expert on the value of the Pound and he says:

"Validus Risk Management Ltd., which led Bloomberg’s first-quarter rankings for predicting the sterling-dollar rate, foresees a slide to as low as $1.20 if the U.K. votes to leave the world’s largest single market on June 23. The pound fell for a second day versus the dollar on Wednesday and slid to the weakest level against the euro since June 2014".

“Sterling has room to decline from here heading into the June vote,” said Kevin Lester, London-based director at Validus, a risk-advisory firm. The pound “could fall to $1.20 in the event of a ‘Brexit’ in June but that could be only the starting point for further weakness. We favor a more tactical approach using various options structures as the risk-reward trade-off is unfavorable in the spot market.”

http://www.bloomberg.com/news/articles/2016-04-06/pound-s-top-forecaster-sees-drop-to-1-35-even-before-eu-vote

[nontabury]

It seems this man really is an expert on the value of the Pound and he says:

"Validus Risk Management Ltd., which led Bloomberg’s first-quarter rankings for predicting the sterling-dollar rate, foresees a slide to as low as $1.20 if the U.K. votes to leave the world’s largest single market on June 23. The pound fell for a second day versus the dollar on Wednesday and slid to the weakest level against the euro since June 2014".

“Sterling has room to decline from here heading into the June vote,” said Kevin Lester, London-based director at Validus, a risk-advisory firm. The pound “could fall to $1.20 in the event of a ‘Brexit’ in June but that could be only the starting point for further weakness. We favor a more tactical approach using various options structures as the risk-reward trade-off is unfavorable in the spot market.”

http://www.bloomberg.com/news/articles/2016-04-06/pound-s-top-forecaster-sees-drop-to-1-35-even-before-eu-vote

When I was in business,the most frustrating part of my job was arranging payment,always in us$ for containers that I would import from Thailand and India. I say frustrating as to when and at what rate to complete the $ purchase at the best rate, So I thought,well let's follow what the professional money exchanger do, result exactly the same.

[sandyf]

I believe that was GBP weakening rather than EUR strengthening.

It is the same thing, the EUR has strengthened against the pound. The EUR has also strengthened against the dollar, but then you can say the dollar has weakened, and go round in circles.

This is not a bad explanation:

"Reading a foreign exchange quote is simple if you remember two things:

1. The first currency listed is the base currency

2. The value of the base currency is always 1

As the centerpiece of the forex market, the US dollar is usually considered the base currency for quotes. When the base currency is USD, think of the quote as telling you what a US dollar is worth in that other currency.

When USD is the base currency and the quote goes up, that means USD has strengthened in value and the other currency has weakened. Rising quotes mean a US dollar can now buy more of the other currency than before.

Majors not based on the US dollar

The three exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). For these pairs, where USD is not the base currency, a rising quote means the US dollar is weakening and buys less of the other currency than before.

In other words, if a currency quote goes higher, the base currency is getting stronger. A lower quote means the base currency is weakening.

Cross currencies

Currency pairs that don't involve USD at all are called cross currencies, but the premise is the same"

.http://www.forex.com/understanding_forex_quotes.html

If in doubt, compare the value of the subject currency against the other major currencies such as USD, GBP. EUR, YEN to see if the movement and direction is the same.

Thanks for that but I did a spell as a day trader a while back.

[chiang mai]

Am curious to know who is planning to do what in respect of any Sterling assets they hold currently, exchanging into Baht now is one option, waiting in the hope of a NO vote is another, waiting until the dust settles after a YES vote is a third, the latter however could take a very long time indeed.

[sandyf]

It seems this man really is an expert on the value of the Pound and he says:

"Validus Risk Management Ltd., which led Bloomberg’s first-quarter rankings for predicting the sterling-dollar rate, foresees a slide to as low as $1.20 if the U.K. votes to leave the world’s largest single market on June 23. The pound fell for a second day versus the dollar on Wednesday and slid to the weakest level against the euro since June 2014".

“Sterling has room to decline from here heading into the June vote,” said Kevin Lester, London-based director at Validus, a risk-advisory firm. The pound “could fall to $1.20 in the event of a ‘Brexit’ in June but that could be only the starting point for further weakness. We favor a more tactical approach using various options structures as the risk-reward trade-off is unfavorable in the spot market.”

http://www.bloomberg.com/news/articles/2016-04-06/pound-s-top-forecaster-sees-drop-to-1-35-even-before-eu-vote

The dollar index has dropped about 5 percent this year which has helped keep the pound above the 1.40 mark.

[Orac]

Am curious to know who is planning to do what in respect of any Sterling assets they hold currently, exchanging into Baht now is one option, waiting in the hope of a NO vote is another, waiting until the dust settles after a YES vote is a third, the latter however could take a very long time indeed.

I got worried just before the Scottish referendum that they would leave the union so moved five years worth of expenses into baht at just under 56 and another chunk into USD.

Still got a fair bit in Sterling but can leave it there for a few years if we vote to leave as i would guess at least 5 years best case for pound to recover though probably quite a bit longer.

[chiang mai]

Am curious to know who is planning to do what in respect of any Sterling assets they hold currently, exchanging into Baht now is one option, waiting in the hope of a NO vote is another, waiting until the dust settles after a YES vote is a third, the latter however could take a very long time indeed.

I got worried just before the Scottish referendum that they would leave the union so moved five years worth of expenses into baht at just under 56 and another chunk into USD.

Still got a fair bit in Sterling but can leave it there for a few years if we vote to leave as i would guess at least 5 years best case for pound to recover though probably quite a bit longer.

Excellent move. I've got about seven years of living expenses here and that doesn't worry me. What is a concern is my Sterling assets of a similar amount and my income which is mostly in Sterling. I suppose sitting it out and waiting is one approach, biting the bullet now is another - the problem with sitting it out is watching those funds lose value and wondering if/when they will ever recover, I suppose going heavily into USD is yet another answer.

I'm sure that many of us are thinking similar thoughts and asking ourselves similar questions.

[chiang mai]

I believe that was GBP weakening rather than EUR strengthening.

It is the same thing, the EUR has strengthened against the pound. The EUR has also strengthened against the dollar, but then you can say the dollar has weakened, and go round in circles.

This is not a bad explanation:

"Reading a foreign exchange quote is simple if you remember two things:

1. The first currency listed is the base currency

2. The value of the base currency is always 1

As the centerpiece of the forex market, the US dollar is usually considered the base currency for quotes. When the base currency is USD, think of the quote as telling you what a US dollar is worth in that other currency.

When USD is the base currency and the quote goes up, that means USD has strengthened in value and the other currency has weakened. Rising quotes mean a US dollar can now buy more of the other currency than before.

Majors not based on the US dollar

The three exceptions to this rule are the British pound (GBP), the Australian dollar (AUD) and the Euro (EUR). For these pairs, where USD is not the base currency, a rising quote means the US dollar is weakening and buys less of the other currency than before.

In other words, if a currency quote goes higher, the base currency is getting stronger. A lower quote means the base currency is weakening.

Cross currencies

Currency pairs that don't involve USD at all are called cross currencies, but the premise is the same"

.http://www.forex.com/understanding_forex_quotes.html

If in doubt, compare the value of the subject currency against the other major currencies such as USD, GBP. EUR, YEN to see if the movement and direction is the same.

Thanks for that but I did a spell as a day trader a while back.

Sorry I wasn't trying to teach you how to suck eggs and I do know from your previous posts that you are familiar with markets, I just thought that the piece may benefit other readers who don't understand and that seemed like a natural place to put it.

[nontabury]

Who are these currency exchange expert? Was't there some proven currency

manipulation a couple of years ago,carried out by some of the major banks.for which they were subsequently find billions.

[sandyf]

Who are these currency exchange expert? Was't there some proven currency

manipulation a couple of years ago,carried out by some of the major banks.for which they were subsequently find billions.

Not quite the same, that was about LIBOR. That is an interbank interest rate, rather than an exchange rate, that is used for short term loans. The banks formed a cartel and all charged the same interest rate. Investigations are still ongoing.

[sandyf]

Thanks for that but I did a spell as a day trader a while back.

Sorry I wasn't trying to teach you how to suck eggs and I do know from your previous posts that you are familiar with markets, I just thought that the piece may benefit other readers who don't understand and that seemed like a natural place to put it.

No problem, I wasn't a very good trader. More winners than losers but invariably one loser would wipe out a large chunk of the winners, making a profit was hard work, gave up when I came here.

[chiang mai]

Who are these currency exchange expert? Was't there some proven currency

manipulation a couple of years ago,carried out by some of the major banks.for which they were subsequently find billions.

In the case of that article it's the person/company with the best track record on these things, that's as good as it gets and in the absence of anything better, I'll pay attention to what they are saying even if nobody else does.

On a related subject and just thinking out loud: if GBP does go to USD 1.20 that could put it somewhere around the low 40's against THB, I wonder if that will represent an opportunity for some to cash in and move back.

[chiang mai]

Another piece of the puzzle, no interest rate rises until January 2020 the markets say (Capital Economics disagrees although they've been wrong before):

http://www.telegraph.co.uk/personal-banking/savings/latest-interest-rates-predictions-first-rise-in-august-2019/

Interesting that they list the reasons why as being firstly, China, secondly the weaker UK economy, is that face saving or what! So yes, demand for Sterling is likely to remain muted hence it's value lower than expats might want.

Edited April 7, 2016 by chiang mai

[sandyf]

Who are these currency exchange expert? Was't there some proven currency

manipulation a couple of years ago,carried out by some of the major banks.for which they were subsequently find billions.

Not quite the same, that was about LIBOR. That is an interbank interest rate, rather than an exchange rate, that is used for short term loans. The banks formed a cartel and all charged the same interest rate. Investigations are still ongoing.

With the scandal now back in the media, another setback for the UK financial sector.

A former Barclays banker accused of manipulating the Libor interest rate only did what he was told to do by his boss without knowing it was wrong, his defence counsel has told a court.

http://www.bbc.com/news/business-35999456

[chiang mai]

Contrasting views from within the IMF:

"The chief economist (of the IMF) indicated that Britain could be better off outside the EU if it forged new trade ties and cemented old ones. Speaking in a personal capacity, Mr Basu said “short-term turbulence” could lead to “improved exports” in the long run. “You would probably see a short-term fall in exports from the UK, a weakening in the pound, but that should then cause a pick-up in exports in the medium term,” he said".

http://www.telegraph.co.uk/business/2016/04/09/no-end-in-sight-for-global-economic-misery-warns-world-bank/

"Mr Basu’s comments on Brexit contrast with those made by IMF chief Christine Lagarde, who warned that an EU exit would cost jobs and investment."

"The IMF will publish analysis on the possible impact of a Brexit in its UK economic healthcheck next month".

It looks like there's the official line and then there's the professional view, I'm guessing the health check report mentioned above will follow Ms. Lagarde's view hmm!

[Orac]

Contrasting views from within the IMF:

"The chief economist (of the IMF) indicated that Britain could be better off outside the EU if it forged new trade ties and cemented old ones. Speaking in a personal capacity, Mr Basu said “short-term turbulence” could lead to “improved exports” in the long run. “You would probably see a short-term fall in exports from the UK, a weakening in the pound, but that should then cause a pick-up in exports in the medium term,” he said".

http://www.telegraph.co.uk/business/2016/04/09/no-end-in-sight-for-global-economic-misery-warns-world-bank/

"Mr Basu’s comments on Brexit contrast with those made by IMF chief Christine Lagarde, who warned that an EU exit would cost jobs and investment."

"The IMF will publish analysis on the possible impact of a Brexit in its UK economic healthcheck next month".

It looks like there's the official line and then there's the professional view, I'm guessing the health check report mentioned above will follow Ms. Lagarde's view hmm!

Not sure there is a great deal of difference in the views here. Short term would be bad with falling exports and pound which clearly would have an impact on jobs and investments moving on to improvements in the medium/long term. As made clear, this is predicated on bring able to forge new trade deals and cementing old ones (not sure which old ones are being referred to as most if not all are currently EU based).

We are current involved in something like 53 separate trade deals so i cannot see this as being a quick process. The major economies have their hands full negotiating TPP and TIPP deals at the moment so any negotiations with the UK will not be a priority and the EU as it stands at the moment is a sclerotic mess and not in a position to quickly negotiate any deal since, under the Lisbon Treaty, it would need ratifying by all remaining members.

[chiang mai]

An approximate definition of short, medium and long term might help our understanding and put things into the Brexit impact context; I think of short term as being 2/3 years and medium term around 7/10 years, if that is correct it points to lowered currency values for at least three years whilst any improvements are dependant on the success of negotiated (and re.) trade deals..

[i claudius]

To put it in perspective , i dont think anyone has a clue , its just a matter of "suck it and see" personally , for my own selfish reasons (exchange rates) i hope we stay in , for the greater good ,out ,out ,out

[billd766]

I found this in my local UK newspaper this morning.

I found it quite interesting, but then I would as a member of UKIP and a firm believer in the Brexit.

http://www.bournemouthecho.co.uk/news/14416999.Hundreds_attend_major_Brexit_rally_in_Bournemouth/

[slipperylobster]

European money is going to crap...

First Greece, then Brussels.... What will happen next?

England pulls out?