GBP/THB, Your Plan Now?

[sandyf]

5 hours ago, chiang mai said:

 

Read the link in post 51 above, the inflation data released yesterday has the Pound strengthening already, up almost 2 cents in 24 hours. At some point the UK will be faced with no good choice, rampant inflation or an increase in interest rates.

Looks like rampant inflation then, analyst on TV last night said increase in interest rates is not an option.

 

At the end of the day 52% of the population went against the BOE and voted for inflation so like us will have to live with the consequences. It was also reported that factory gate prices are now showing increases in the order of 10%, a precursor of things to come.

[AlexRich]

1 hour ago, SheungWan said:

 

Whatever one's projections it seems somewhat unwise to be totally reliant on the sterling exchange rate assuming one has choices to make.

 

Yes, but you could easily make the wrong choices, as FX is notoriously unpredictable. Any issues in the region or specifically in Thailand (not impossible) would weaken the Baht. Any improvements in the news flow in the UK (e.g. Government infrastructure spend in October, Brexit economic impact not as bad as predicted) could see GBP strengthen. And if you hold other currencies then you could be whacked by any issue that affects them ... the dollar could go any direction.

 

So I cut my cloth and look for better (and safer) yields.

[chiang mai]

5 minutes ago, sandyf said:

Looks like rampant inflation then, analyst on TV last night said increase in interest rates is not an option.

 

At the end of the day 52% of the population went against the BOE and voted for inflation so like us will have to live with the consequences. It was also reported that factory gate prices are now showing increases in the order of 10%, a precursor of things to come.

 

It's difficult to imagine that BOE will let inflation go much over 3% before they are forced to act and raise interest rates, especially true if the US has raised rates by that time. As we speak GBP is climbing against USD based on a single solitary inflation report that was 0.1 above the estimate! Imagine what that would do to Sterling if there was a serious jump and imagine what that will do to exports and the deficit.

Edited August 17, 2016 by chiang mai

[AlexRich]

1 minute ago, chiang mai said:

 

It's difficult to imagine that BOE will let inflation go much over 3% before they are forced to act and raise interest rates, especially true if the US has raised rates by that time.

 

I'm not so sure as inflation helps erode debt balances ... I think all indebted central banks are aiming at generating inflation in their economies ... Japan being a case in point. The problem is once the genie is out of the bottle will they be able to control it at an acceptable level? 

[chiang mai]

1 minute ago, AlexRich said:

 

I'm not so sure as inflation helps erode debt balances ... I think all indebted central banks are aiming at generating inflation in their economies ... Japan being a case in point. The problem is once the genie is out of the bottle will they be able to control it at an acceptable level? 

 

If nothing else, inflation helps make a big unacceptable number appear much smaller and far more agreeable.

[sandyf]

1 minute ago, chiang mai said:

 

It's difficult to imagine that BOE will let inflation go much over 3% before they are forced to act and raise interest rates, especially true if the US has raised rates by that time.

Not really. Once prices have adjusted to the new value of the pound inflation would start to decrease, unless of course the pound is in a never ending decline.

The opinion was that the BOE sees growth as a much higher priority than inflation.

 

Fed are testing the water.

" We're edging closer towards the point in time where it will be appropriate I think to raise interest rates further," said William Dudley, president of the New York Federal Reserve.

http://www.bbc.com/news/business-37099064

 

[Ricardo]

6 hours ago, chiang mai said:

 

If nothing else, inflation helps make a big unacceptable number appear much smaller and far more agreeable.

 

Agreed, and the UK-government owes a fortune & is still having to borrow like there's no tomorrow, having now abandoned any hope of balancing the books by 2020, so eventually repaying debts in devalued inflated pounds would suit them just fine.

 

The BoE will increase interest-rates IMO, just more slowly than they should, and savers will see negative real interest-rates. Didn't something like this happen in the 70s or 80s ?  I wasn't paying attention back then, being poor means you don't need to, but once you've got some savings then you become acutely aware of low/zero/negative  real-interest-rates !

 

Incidentally the cost of (imported) fuel was one of the causes of the slight-increase in UK-inflation, according to the BBC.

 

http://www.bbc.com/news/business-37092745

 

And the Retail Price Index jumped from 1.6% to 1.9%, in July, that looks to me like an early sign of inflation due to a weak currency, also

 

" Input prices faced by manufacturers rose 4.3% in the year to July, compared with a fall of 0.5% in the year to June "  is another sign,

 

" The most dramatic rises came in the cost of imported food materials, which rose 10.2%, and the price of imported metals, which rose 12.4%. "  so I suspect we won't have to wait very long before we see that rising inflation !

 

 

[chiang mai]

Want to know what's in the future, 10.2% and 12.4% says it all, the UK is going to become very expensive..

[SheungWan]

7 hours ago, AlexRich said:

 

Yes, but you could easily make the wrong choices, as FX is notoriously unpredictable. Any issues in the region or specifically in Thailand (not impossible) would weaken the Baht. Any improvements in the news flow in the UK (e.g. Government infrastructure spend in October, Brexit economic impact not as bad as predicted) could see GBP strengthen. And if you hold other currencies then you could be whacked by any issue that affects them ... the dollar could go any direction.

 

So I cut my cloth and look for better (and safer) yields.

 

Staying 100% in sterling is a choice as well.

[Ricardo]

13 minutes ago, chiang mai said:

Want to know what's in the future, 10.2% and 12.4% says it all, the UK is going to become very expensive..

 

Quite, the manufacturers & importers & retailers cannot absorb that sort of cost-increase, they simply have to pass it on !

 

A pessimist might foresee a painful pre-Christmas run-up developing ?

 

And the aspiring socialists expect to fund their spending-dreams by increasing corporate-taxes ? But you can only tax a profit if it's made !

[sandyf]

Federal Reserve split on timing of next rate rise

http://www.bbc.com/news/business-37111395

 

[morrobay]

On 8/17/2016 at 8:24 AM, AlexRich said:

 

Yes, but you could easily make the wrong choices, as FX is notoriously unpredictable. Any issues in the region or specifically in Thailand (not impossible) would weaken the Baht. Any improvements in the news flow in the UK (e.g. Government infrastructure spend in October, Brexit economic impact not as bad as predicted) could see GBP strengthen. And if you hold other currencies then you could be whacked by any issue that affects them ... the dollar could go any direction.

 

So I cut my cloth and look for better (and safer) yields.

 

"Any issues specifcally in Thailand could weaken the baht"

 Like what ???. Just about all the issues seem to strengthen the baht.

Edited August 18, 2016 by morrobay

[chiang mai]

UK retail sales beat expectations, plus yesterdays unemployment figures were better than expected. The net effect is that the Pound rallied against USD, up to 1.31x and up against THB also. But it's August, it's hot weather and there's loads of tourists around, no big surprise really.

 

Worth noting however is:

 

"Measured by the deflator, prices at stores -- including petrol stations -- fell an annual 2 percent in July, marking the 25th month in which retailers cut prices."

 

http://www.bloomberg.com/news/articles/2016-08-18/u-k-retail-sales-surge-as-hot-weather-pound-drop-fuel-spending

Edited August 18, 2016 by chiang mai

[AlexRich]

2 hours ago, morrobay said:

 

"Any issues specifcally in Thailand could weaken the baht"

 Like what ???. Just about all the issues seem to strengthen the baht.

 

Political issues ... Red Shirt activity, prosecution of Yingluck, more bombings ... many possibilities ... and impossible to predict. 

 

 

 

 

[JB300]

Citi August view on GBP

GBP: Downside Risk

• Apart from Brexit - led political uncertainty translating into economic uncertainty, the UK also faces triple deficits (trade, fiscal, current account) that may now take a longer time to abate. This will likely weigh on the sterling. At the same time, Citi also expects additional easing from the BoE in coming months as a technical recession looms. The added burden of prolonged uncertainty over the timing of triggering Article 50 to commence formal separation talks with the EU is also negative for the sterling 

 

[chiang mai]

16 minutes ago, AlexRich said:

 

Political issues ... Red Shirt activity, prosecution of Yingluck, more bombings ... many possibilities ... and impossible to predict. 

 

 

 

 

 

Historically those things have never affected the Baht, even when there were tanks on the streets and snipers were taking potshots! The problem, if indeed it is a problem at all, is that the fundamentals of the Thai economy are very sound, ample supply of cheap labour, low taxation, no unions or social services overhead and almost zero unemployment - plus government debt is low and foreign currency reserves are very very high. One or more of the things I've listed would have to go into reverse in a big way for the economy to suffer and the value of THB to fall.

[MJP]

12 hours ago, chiang mai said:

 

Historically those things have never affected the Baht, even when there were tanks on the streets and snipers were taking potshots! The problem, if indeed it is a problem at all, is that the fundamentals of the Thai economy are very sound, ample supply of cheap labour, low taxation, no unions or social services overhead and almost zero unemployment - plus government debt is low and foreign currency reserves are very very high. One or more of the things I've listed would have to go into reverse in a big way for the economy to suffer and the value of THB to fall.

 

There is only one event which will see THB fall. Unmentionable.

UK along with the rest of the West will see a short period of deflation followed by likely rampant inflation.

Still very glad the UK's getting out of the EU.

[chiang mai]

2 hours ago, MJP said:

 

There is only one event which will see THB fall. Unmentionable.

UK along with the rest of the West will see a short period of deflation followed by likely rampant inflation.

Still very glad the UK's getting out of the EU.

 

I doubt it, even THAT event is unlikely to negatively impact THB value.

 

Also, the UK's time for inflation is now, we're all done with deflation in that part of town!

[chiang mai]

Some interesting trivia for the day:

 

The ONS has made the remarkable discovery that UK wealth is wedded to property values, I know you will all be shocked to learn that!

 

More interestingly however is that if we subtract all debt from that calculation of wealth of G7 countries, Japan has the highest net wealth whilst the UK is bottom of the list with a minus figure.  It would be interesting to see the same calculations performed against the Thai economy, GDP minus consumer, public and private company debt, if anyone has nothing better to do with their time!

 

"The ONS figures show that the growth of UK’s property and fixed asset values outstripped that of all other G7 countries while Britain’s total financial assets – collecting together the financial assets of households, the government and companies - put in the worst performance in the G7.

Japan had the highest financial net worth in the G7 at £1.9tn while the UK and Italy had the lowest, both at minus £0.3tn".

 

https://www.theguardian.com/business/2016/aug/18/ons-data-shows-uk-wealth-wedded-to-property

[cmsally]

A nation of million pound homeowners that can't afford to shop at Waitrose !

[sandyf]

On 8/18/2016 at 1:27 PM, morrobay said:

 

"Any issues specifcally in Thailand could weaken the baht"

 Like what ???. Just about all the issues seem to strengthen the baht.

Thailand has a substantial amount of foreign reserves in USD, depreciation of the dollar weakens the Baht.

USD opened on Monday at 95.5 and this morning was 94.2, currently at 94.5.

This drop in the dollar has lifted the USD/GBP.

[SheungWan]

On 19/08/2016 at 3:37 AM, cmsally said:

A nation of million pound homeowners that can't afford to shop at Waitrose !

 

On 19/08/2016 at 3:37 AM, cmsally said:

 

 

This would not be so unusual in certain parts of London where pensioners who bought back in the 80s have been described as Accidental Millionaires eg Islington. Old house maintenance can indeed provide a drag on disposable income. Maybe better to downsize to free up assets, improve income flow and provide some opportunity to hedge out of sterling. The downside risk is that the process has its own risks, so better to do it before starting to lose one's marbles.

[SheungWan]

The recent recovery in the GBPTHB rate reversed Friday after Philip Hammond suggesting UK exiting the single market as part of Brexit. Markets not too impressed.

[Briggsy]

3 hours ago, SheungWan said:

The recent recovery in the GBPTHB rate reversed Friday after Philip Hammond suggesting UK exiting the single market as part of Brexit. Markets not too impressed.

I saw the sharp downward move but didn't know what the trigger was. I nosed around for interest rate news but found nothing. Thanks for the update.

[SheungWan]

On 17/09/2016 at 0:22 AM, SheungWan said:

The recent recovery in the GBPTHB rate reversed Friday after Philip Hammond suggesting UK exiting the single market as part of Brexit. Markets not too impressed.

 

On 17/09/2016 at 3:37 AM, Briggsy said:

I saw the sharp downward move but didn't know what the trigger was. I nosed around for interest rate news but found nothing. Thanks for the update.

 

....and as the UK Government more than suggests exiting the single market, pressure on the pound mounts.

[Briggsy]

Indeed. I have now decided to postpone an (unnecessary) vehicle purchase due to the exchange rate/value of the pound.

[chiang mai]

 

[chiang mai]

It looks this morning as though GBP/THB may be going to drop below 44.00, SCB now quoting 44.03 - with USD at 1.285 I wonder where GBP/THB bottom is?

Edited October 4, 2016 by chiang mai

[The Fat Controller]

Cry and hope it does not go below 40 !

Edited October 4, 2016 by The Fat Controller

[manfredtillmann]

http://www.afr.com/news/world/theresa-mays-brexit-deadline-puts-uk-at-a-disadvantage-20161003-gru7rm

no good news on the horizon, chaps...