Pound against the dollar

[rudebhoy]

Fallen to $1.05 overnight, a record low. Was $1.40 this time last year, $1.20 a month ago. Exchange rate against the Euro also plummeting.

Surely very worrying for the economy and going to make the cost of living crisis even worse.

 

[PJ87]

Go for growth or go broke it seems ..

The later seems most likely

 

[Captainron]

Worrying times. This sort of slide brings rapid price increases to oil and gas.

 

[Lord Tyrion]

We have a reasonable sized dollar invoice to pay at work today ?. We will be talking to the supplier to see if we can delay it a few days and hope for a bounce back. Otherwise it's a major hit on profit for us. Not good for business and ultimately not good for consumers as prices will need to go up again to compensate.

 

[GreiginFife]

But, hey, we got control of our borders back…

 

[Doon frae Troon]

When I started work in the mid 1960's we gave $3 to the £1.

I once recall a rich yank peeling off 4 x £10 notes to pay for a £3.15/- putter.
£10 notes were very seldom seen in those days.
They were a about week's wages for a working man.

 

[theoneandonly]

My wife's company buys a lot of stuff in USD , it's not great......

 

[rudebhoy]

We have a reasonable sized dollar invoice to pay at work today ?. We will be talking to the supplier to see if we can delay it a few days and hope for a bounce back. Otherwise it's a major hit on profit for us. Not good for business and ultimately not good for consumers as prices will need to go up again to compensate.

There is talk of an emergency BoE meeting which would jack up interest rates. That may prompt a bit of a bounce back, but the market seems to have very little confidence in our "new" economic policy.

 

[PJ87]

There is talk of an emergency BoE meeting which would jack up interest rates. That may prompt a bit of a bounce back, but the market seems to have very little confidence in our "new" economic policy.

Getting fed up with the bank of England's attempts to curve inflation. This isn't a normal recession. People aren't going around splashing the cash on cars and holidays so a little rise to bring that down would make sense.. this is people spending money on stuff they need to survive.. gas, electric, food , petrol.. so raising the interest rates is just an unnecessary kick in the trousers.

 

[Tashyboy]

Difficult to discuss without going down the political discussio, but stating facts. The recent budget has been described as helping the wealthiest 1% of the UK. So if that is the case how is that mini budget going to encourage people to go out and spend and stimulate the economy. The Chancellor has said “further tax cuts are on the way”. So why not now.
Aldi have said that they have had new customers “ coming in there droves”. Some people are already struggling and it’s going to get worse.
Most people when getting a low exchange rate only notice when going on holiday, but as has been mentioned. Business is going to struggle.

 

[PJ87]

Difficult to discuss without going down the political discussio, but stating facts. The recent budget has been described as helping the wealthiest 1% of the UK. So if that is the case how is that mini budget going to encourage people to go out and spend and stimulate the economy. The Chancellor has said “further tax cuts are on the way”. So why not now.
Aldi have said that they have had new customers “ coming in there droves”. Some people are already struggling and it’s going to get worse.
Most people when getting a low exchange rate only notice when going on holiday, but as has been mentioned. Business is going to struggle.

Considering it's been leaked they are looking at a few more measures that sound like would only come into effect from the new tax year anyways it would make sense to announce them all at once

 

[SwingsitlikeHogan]

I changed $600 into £s on Friday. If I had waited to today I’d have got more £s for my $s.

Just think…if I had $60,000,000 to change into £s how much more I would have made today than I would have made on Friday, or indeed compared with a few months ago had I been aware or able to affect what was going to happen to the £ I could have bought $60,000,000 back then and sold it today at a massive profit as the £ has dropped by 20%.

Hold on…?

 

[rudebhoy]

Difficult to discuss without going down the political discussio, but stating facts. The recent budget has been described as helping the wealthiest 1% of the UK. So if that is the case how is that mini budget going to encourage people to go out and spend and stimulate the economy. The Chancellor has said “further tax cuts are on the way”. So why not now.
Aldi have said that they have had new customers “ coming in there droves”. Some people are already struggling and it’s going to get worse.
Most people when getting a low exchange rate only notice when going on holiday, but as has been mentioned. Business is going to struggle.

It won't.

As Paul stated earlier, this is not a case of demand exceeding supply and driving prices up. The rampant inflation is down by and large to the massive increase in oil and gas prices, which in turn is driving the cost of production and distribution up in just about every other sector.

People have less money in their pockets, and the mini budget is not going to have any material impact on that for the vast majority, particularly with fuel prices going up again next week. Putting interest rates up again is just going to make matters worse as that will lead to mortgage rates increasing. It is going to be a very bleak winter imo.

 

[rudebhoy]

Considering it's been leaked they are looking at a few more measures that sound like would only come into effect from the new tax year anyways it would make sense to announce them all at once

I had my annual review with my financial advisor last week. His view is that the markets want to see the UK trying to address the national debt which has increased massively as a result of the pandemic, and the recent decision to borrow circa 100 billion to subsidise fuel prices. That would mean finding ways of increasing tax revenues, not looking for ways to reduce them when our finances are in such a perilous state.

 

[road2ruin]

Getting fed up with the bank of England's attempts to curve inflation. This isn't a normal recession. People aren't going around splashing the cash on cars and holidays so a little rise to bring that down would make sense.. this is people spending money on stuff they need to survive.. gas, electric, food , petrol.. so raising the interest rates is just an unnecessary kick in the trousers.

Couldn't agree more. BoE have just one tool to curb inflation and that's the increase of interest rates however, as you point out, this isn't driven by consumer spending it is global factors. Increasing interest rates isn't going to have that much effect on someone who is already scratching round for spare ££'s and will most likely cause them more issues as mortgage repayments and rents go up.

Most of us have already spent the last few months working out household budgets etc and definitely haven't been throwing unspent cash around.

 

[IanM]

But, hey, we got control of our borders back…

So why is the euro doing similar?

I'm in Portugal at the mo and the local news is having a panic about it.

I guess Portugal have left the eu too as I went through the same Border Control as I did 5 years ago

 

[Mudball]

Our business will take a big hair cut since we report in USD. It is not just the GBP, but USD has been gaining for the last months. It is stronger against everything. I am sure this will be the narrative that the Daily Mail will roll out soon.

Having said that, what has happened since the mini-budget is astonishing. We were £2 to GBP back a few years. After B* event, we came down to £1.4 ish, and then it tanked to near parity in the last few hours. Those who shorted the pound last week have made an absolute killing. Any one holding US stocks also will be thrilled to get an unexpected 20% increase in value this week.

 

[rudebhoy]

So why is the euro doing similar?

I'm in Portugal at the mo and the local news is having a panic about it.

I guess Portugal have left the eu too as I went through the same Border Control as I did 5 years ago

the euro, along with the Yen and most major currencies, is down against the dollar, but by nowhere near the extent the pound has sunk by.

maybe a better comparison for you would be the pound against the euro (clue - the pound is also well down against the euro, from 1.20 a month ago to 1.11 today)

 

[GreiginFife]

So why is the euro doing similar?

I'm in Portugal at the mo and the local news is having a panic about it.

I guess Portugal have left the eu too as I went through the same Border Control as I did 5 years ago

Apart from my original comment being a slightly sardonic remark, from what I can see, the Euro (which has never been particularly strong against either the GBP or USD) has fallen around 3c in the last 45 days or so. In the same period GBP has fallen closer to 20p.

Like many things direct comparison between the Euro and GBP is not really straight forward as you would need to assume a similar starting point (to relative strength) against the target (in this case USD).

 

[rudebhoy]

Our business will take a big hair cut since we report in USD. It is not just the GBP, but USD has been gaining for the last months. It is stronger against everything. I am sure this will be the narrative that the Daily Mail will roll out soon.

Having said that, what has happened since the mini-budget is astonishing. We were £2 to GBP back a few years. After B* event, we came down to £1.4 ish, and then it tanked to near parity in the last few hours. Those who shorted the pound last week have made an absolute killing. Any one holding US stocks also will be thrilled to get an unexpected 20% increase in value this week.

from the Sunday Times -