Anyone else concerned about the fall in sterling?

[CryptoPlankton]

As I said before, a run on the pound. Balance of payments crisis, UK going to the IMF with a begging bowl. Obvious consequences of Brexit.
Compelled by IMF to rejoin the EU and the Euro.
The Truss dalek appears to have failed already. Must be a record in stupidity.

Can you not kindly remove Brexit from your arguments? It is done, gone, fini. Understand?

Since when, anyway, did the IMF compel any country to do anything?

Dod

For good or for evil, the consequences of Brexit are going to be with us for a very long time.

I can understand that some may be just fed up with it, but any attempt to sweep all comment under the carpet is shallow.

I think the point is that, regardless of whether (or how much) Brexit has been a factor in the various economic conditions we see today, banging on about it won't change anything. Whatever any of us think about Brexit, it is done and we really need to just concentrate on where we go from here.

[tjh290633]

Clearly the Bank of England is not worried, or it would have raised interest rates several times by a full point by now. The Fed has done what it needed to, the BofE has not.

TJH

[TUK020]

All we need to do is remind the markets that we have now taken back control of our monetary and fiscal policy, the pound will rise, and therefore energy prices (gloabl, based on dollars) will fall, as will inflation.
Big letters, side of a bus.

[TUK020]

There, I didn't even mention the 'B' word

[Steveam]

I see people on here (I include myself) reporting portfolio or income performance without regard to currency fluctuations. I think I remember a previous thread and this was gently dismissed as swings and roundabouts: sadly, as some have mentioned above, there is a clear trend of the £ dropping against the $. Despite most of my expenditure being in £ there is a real problem as we import (prices rise) and I have some commitments in a currency which is informally tied to the $.

The saving grace in this, for me, is significant holdings in companies and ETFs which pay dividends in $ (RIO, BHP, SHEL being examples) and other companies which generate income from a range of countries (DGE, BA.)

I’ve played around with my spreadsheets to look at income in £ (which I usually see) and in £ adjusted for its devaluation against the $. On the adjusted basis I’m not making progress.

Best wishes,

Steve

[Steveam]

£ now at lowest against the US$ for 37 years (AND low against the € and ¥ so indicative of a U.K. issue).

https://www.bbc.co.uk/news/business-62923994

Best wishes,

Steve

[GrahamPlatt]

...Just one quick B***** comment.

As things have turned out, whatever you think of Brexit, now has to be just about the most s*** time in history to choose it as an option.

Huh! Wasn't Covid and the Ukraine war all part of Brexit? Intentional acts/events.

More seriously, perhaps one of the best times in history for the events to coincide.

Much of UK relative decline over the last 30+ years is governance induced - such is the low quality of (now former) EU British Assembly MP's in Westminster. A century ago such MP's managed a entire Empire spanning the globe. For centuries the £/$ rate remained up at around 4.50 US$ per GB£ level (data back to 1791) Nowadays they can't even manage a bunch of northerly European islands well. From the end of WW2 up to joining the EU (Common Market) the Pound hung around the 2.80 US$ per £ level. Since then it seems to be on a progressive path towards dropping to a third of that value. Whilst over the last 22 years the FT All Share stock index is down in real price only terms and barely positive in real total return terms. Fundamentally UK management (governance) is pretty cr*p. Truss may mean well, but when she's supposed to be the best that the Tories have to offer as PM, it does tend to raise a and a

It was a mistake for the UK to join the EU in the first place, decades of helping to subsidise/uplift competitors didn't yield a reflected dividend, just lowered the UK relatively down to below those that it helped to uplift. For decades you could drive throughout Europe and see boards indicating that the road/motorway you were driving on was funded by the EU ... a.k.a UK. Funniest of all, is that when the UK left the EU it expected the UK to further pay it even more, rather than the EU paying back some of what the UK paid towards uplifting Europe/EU across all of those decades when it was a member.

All except your last paragraph, I’d agree with. My reasoning being that “the EU” were not our competitors, we were a part of it.

[scrumpyjack]

As others have said, this is basically a story of dollar strength, which always happens in times of international crisis/uncertainty.

If you look at the pound/euro graph it isn't that bad and the pound is higher than it was a couple of years ago.

That is not to deny the UK economy is pretty shaky but I can see why the BoE does not seem to be panicking ... yet!

[xeny]

That is not to deny the UK economy is pretty shaky but I can see why the BoE does not seem to be panicking ... yet!

At least part of the BoE's role is to inspire confidence - they'll never appear to be panicking, and to be frank, they're short of options.

If they deviate from slow measured interest rate rises with lots of open mouth operations about how they will do whatever it takes to control inflation then the £ will plummet.

Conversely if they actually raise interest rates in the way that the inflation numbers would encourage, the housing market will plummet and we'll need another bank bailout which would do bad things to the debt/GDP ratio both on the numerator and the denominator.

They're between a rock and a hard place.

[MDW1954]

Moderator Message:
There is a reason that this board is now more prominently located than it was: to make discussions about the economy more visible.

It wasn't about providing another forum for the type of "discussion" that exists over on Current Affairs and News. Political posts, and "single issue agenda" posts are not welcome on this board. As this thread has degenerated into some of that territory, a number of off-topic posts have been deleted.

--MDW1954

[Nimrod103]

BoE raised rates 0.5%, which is far behind the Fed.
How soon before we will see £1 = $1, and Bailey's resignation?

[murraypaul]

BoE raised rates 0.5%, which is far behind the Fed.
How soon before we will see £1 = $1, and Bailey's resignation?

We are getting there pretty quickly.

Doesn't seem to be Bailey's fault at the moment though, does it?

[spasmodicus]

Back in '92, on Black Wednesday almost 30 years to the day, Tory chancellor Norman Lamont raised interest rates to 12% and then suspended a rise to 15% as the pound departed from the ERM. Although Lamont lost his job, the subsequent economic rebound attibutable to a favourable exchange rate allowed the ensuing Labour govt. to inherit a reasonably good economic situation. I wonder whether history will repeat itself. If you look at the FTSE 100 index graph for those years, there was no discernable blip at that point and the index then rose from around 2700 to peak at over 6900 in October 1999 - almost its present level!
S
(struggling to look on the bright side)

[JohnB]

The collapse in sterling has made UK salaries less attractive, even with the lifting of tax burdens on the rich. It will make energy even more expensive, negating the subsidy schemes. Its a clear sign that the financial world thinks that Truss's plan is barmy, and no business should consider investing in the UK. There is no sign that the UK can get any benefit from being in Europe but outside the EU. It all feels like the 1970s, and I can see that if the BOE loses a battle with Truss then the IMF will be needed to bail us out.

[Nimrod103]

BoE raised rates 0.5%, which is far behind the Fed.
How soon before we will see £1 = $1, and Bailey's resignation?

We are getting there pretty quickly.

Doesn't seem to be Bailey's fault at the moment though, does it?

I'm not sure Bailey gets off. Of all the Central Banks, the BoE seems a long way behind in raising interest rates. It hasn't gone 0.75% like the USA and Euro area. I think UK interest rates should be above US ones normally, and at the moment, they are not.

[richfool]

I'm feeling rather pleased with my holdings of US Dollars in my Wise account, along with some Swiss francs and Euros.

Ironically the tax rebates the Gov are doling out are going to be absorbed, if not overwhelmed, by the increase in mortgage payments that those with mortgages are going to have to cope with, when the BOE interest rate hikes (to support the £ and dampen inflation) feed through.

[Mike4]

BoE raised rates 0.5%, which is far behind the Fed.
How soon before we will see £1 = $1, and Bailey's resignation?

We are getting there pretty quickly.

Doesn't seem to be Bailey's fault at the moment though, does it?

He is well placed to find himself the escape goat (thank you Jade Goody for that one!) though, I'd imagine.

[Tara]

BoE raised rates 0.5%, which is far behind the Fed.
How soon before we will see £1 = $1, and Bailey's resignation?

We are getting there pretty quickly.

Doesn't seem to be Bailey's fault at the moment though, does it?

I'm not sure Bailey gets off. Of all the Central Banks, the BoE seems a long way behind in raising interest rates. It hasn't gone 0.75% like the USA and Euro area. I think UK interest rates should be above US ones normally, and at the moment, they are not.

How is the BoE behind the ECB in raising rates? The BoE has raised by 2% this year, and the ECB has only raised by 1.25% this year.

The Euro is in fact a bigger “basket case” currency than Sterling, and it will inevitably break up within the next few years. One size currency can never fit all.

The dollar is just the “least dirty shirt” in the drawer at present. The finances of the US are hardly in any better shape than in the UK or Europe. It will also begin to collapse when the Chinese start to dump their vast holdings.

[Nimrod103]

BoE raised rates 0.5%, which is far behind the Fed.
How soon before we will see £1 = $1, and Bailey's resignation?

We are getting there pretty quickly.

Doesn't seem to be Bailey's fault at the moment though, does it?

I'm not sure Bailey gets off. Of all the Central Banks, the BoE seems a long way behind in raising interest rates. It hasn't gone 0.75% like the USA and Euro area. I think UK interest rates should be above US ones normally, and at the moment, they are not.

How is the BoE behind the ECB in raising rates? The BoE has raised by 2% this year, and the ECB has only raised by 1.25% this year.

The Euro is in fact a bigger “basket case” currency than Sterling, and it will inevitably break up within the next few years. One size currency can never fit all.

The dollar is just the “least dirty shirt” in the drawer at present. The finances of the US are hardly in any better shape than in the UK or Europe. It will also begin to collapse when the Chinese start to dump their vast holdings.

AIUI the market was expecting 0.75 from Bailey, so is currently very disappointed with him. The fact that today's up and down in the Pound has occurred in the run up to, and the aftermath, of Bailey's non statement suggests to me that the market is currently more affected by what he says. I'm not sure the mini-budget was that big a deal. This is what Matthew Lynn in the Telegraph said at lunchtime:
The mini-Budget was about structural reform to improve the supply side of the economy, not simply a giveaway. If you take out the energy support package, which any Government would have introduced, there was no dramatic increase in the deficit.

Of course as soon as people start saying the BoE will not allow the Pound to go below parity, it sets up a reason for speculators to try to make money by betting against. Exactly like a currency peg.

[XFool]

The Euro is in fact a bigger “basket case” currency than Sterling, and it will inevitably break up within the next few years.

I dunno. But I just wish I had a pound (or possibly a dollar?) for every time I've heard that over the years.