Sterling crashed a staggering 6% overnight to US $1.841. No-one knows precisely why such a huge drop happened and it has been attributed to algorithms responding to a speech yesterday by Francois Hollande demanding "tough Brexit negotiations".
The currency eventually rose to #1.23 but that's still 1.5% down from yesterday's level. Those residing here on UK pensions must now be worried about how low sterling can go, if they were not already concerned.
http://www.bbc.com/news/business-37582150
Last edited by fountainhall; October 7th, 2016 at 11:03.
I think you mean something like US $1.184 and not 1,841.
In any event on another forum someone is prediction the GBP will go to around 30-35 to the Thai Baht.
This ain't looking good at all and thousands in Thailand or proposing to come here will be affected.
This is all down to those who voted for Brexit.
Thanks for the correction. I omitted a 1 - it should have been 1.1841.Originally Posted by homeseeker
The Brexit vote tripped an overdue correction - the balance of payments data evidences that - however the current falls are less rational.
During periods of relative stability, there is usually little fluctuation between the THB and USD. The GBP is currently close to an historic low against the USD, and there's no compelling reason why it should dip much further without rebounding.
Markets always react badly to uncertainty, but if you look at the realities of Brexit, not least the fact that the EU has far more to lose from an unfriendly settlement than the UK has, there really isn't any reason why it should negatively impact the value of GBP vs USD in the long term.
There is a growing disconnect between EU officialdom and the sovereign nations of europe, and a clear sense across the continent that the EU 'project' has now hit the buffers. It follows that unless Brussels can reinvent itself as a benign steadying hand, the EU as an entity will probably collapse over the course of the next decade. If it does so in an ugly fashion, that could have some negative consequences for Sterling.
On the other hand there are two reasons why Sterling may gain.
The first is Mrs May's recently expressed concern for the plight of savers and pension funds. If she follows through and leads the way back to 'normal' interest rates, Sterling will become the world's favourite currency.
The second are the rumbling warnings of a second asian financial crisis. I can't claim to be an expert on this, but I doubt Thailand is as exposed as it was in '98. Nevertheless, a major upset would not be without consequence for the THB.
Overall, on balance, I think the odds of a further fall in GBP vs THB over the coming months are marginally outweighed by the odds of a recovery, so I am not rushing to convert my pennies..
Last edited by Old git; October 7th, 2016 at 14:27.
1. The EU is not going to collapse anytime soon.
2. The UK is not (as Brexiteers think) the centre of the Universe, and to be treated as such
3. The EU does NOT have more to lose than the UK from the UK leaving the single market (which seems the direction May is going in)
4. The disgraceful plans of the British Govt to force UK employers to publish lists of their migrant workers is like something from the Third Reich - all right minded people should be appalled, but UKIPpers and Tories seem instead to be having a collective orgasm over it. Frightening.
Economists try to pretend that their subject is virtually a science but most people realise it's a humanity, If your currency is strong then your exports are expensive and manufacturing suffers while your interest rates are usually high. If your currency is weak then imports go up but manufacturing can do well and your mortgage will probably cost less. It is impossible to have a full cake stand in the middle of the table while the whole populace is gorging themselves on donuts, eclairs, turnovers etc at the same time.
Scottish: I'm not sure I agree with you about the EU. I think it's in the most danger it's faced since it's inception. I'm looking at the eastern European countries and the way they have reacted to the migrant influx and their disregard for basic European law coupled with the financial crises all over the continent and I can envisage a split.
Last edited by arsenal; October 7th, 2016 at 15:46.
Andaman! (October 8th, 2016)
Not just Brexit; according to the UK press, today's fall may be the result of "fat finger syndrome"....in other words, a cock-up.
It certainly cost me this morning; and surprised me when I collected my exchanged baht - I hadn't yet read the papers.
Ah! the joys of global capitalism! some soppy trader ( not long past puberty quite possibly), has a hangover, doesn't look at what he's doing and everyone else pays for it. We are indeed blessed to live in a world controlled by such people.
Scottish,
On points 1 and 3 you're in blind denial of the facts.
Point 2 is just your anti-English racism showing through.
And Point 4..
The government constantly asks large employers for various data sets to assist in national statistics gathering. So, they want to get a take on how many foreign/EU nationals are working in the UK - a perfectly reasonable exercise in the light of Brexit so they can assess the likely impact of any measures they take.
But Corbyn's hate squad (AKA Momentum) - desperate for a cause to champion.. - are trying to portray it as some sort of sinister exercise..
..and you're buying into that tosh - what a surprise!
I'm certainly no expert - and don't believe most of those who say they are!
There is certainly concern about some of the currencies in Asia, due in part to the continuing strength of the US dollar, the prospect of a hard landing for China's economy and on-going pressure on the Hong Kong dollar. In 2015, the Hong Kong government spent close to US$30 billion defending its peg against the US$. The year before it was $10 billion. Not that this is causing too much concern in Hong Kong whose foreign exchange reserves are in the region of $360 billion in addition to a currency peg fund specifically to maintain the narrow band against the US$.
Interestingly Thailand is in a better position than the UK with FE reserves of $182 billion against the UK's $164 billion. That compares to the $35 billion it wiped out in the pathetic attempt to defend the Baht in 1997. What all this means - I haven't the faintest idea!
On the whole I'm going to leave you two to your upcoming discussion however I think Old Git is talking garbage. Where is the anti English racism in point 2?
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