Buy dollars now or wait?

[Hornblower]

I'm off to the US at the end of the year, is the pound going to continue it's freefall against the dollar or will it have recovered a little by then?

 

[Cadiz Seagull]

And what are this week's winning lottery numbers?

I was going to the US over Christmas as I did last year but I'm glad I decided otherwise the way the pound has slumped against the dollar.

 

[Brighton till i die]

i'm not sure - hope this helps...

 

[Bozza]

These guys aren't forecasting too much of a change...

US Dollar Exchange Rate

 

[Hornblower]

Thanks Bozza, that's very useful, I think I'll hold my nerve for now.

 

[simmo]

The reason why the £ has dropped so much against the $ in the last week or two is because there is scope in the UK economy to cut interest rates (and aggresively) by the Bank of England and that the US cannot do this anymore because they have already done this in the last 12 months and they have no or very limited scope for cuts anymore. I think their interst rates are 2% ours is 4.5%.

Most economists believe that it is probable that the the BofE may take of at least half if not a full point of interest rates by Xmas, if they do that, which is always open to conjecture, then the value of the £ against the dollar will fall.

 

[Bozza]

The reason why the £ has dropped so much against the $ in the last week or two is because there is scope in the UK economy to cut interest rates (and aggresively) by the Bank of England and that the US cannot do this anymore because they have already done this in the last 12 months and they have no or very limited scope for cuts anymore. I think their interst rates are 2% ours is 4.5%.

US rate is 1.5%, expected to be knocked back to 1% by the Fed later this week.

 

[simmo]

US rate is 1.5%, expected to be knocked back to 1% by the Fed later this week.

Fair enough about the US rates wasn't quite sure. If the Fed cut again the then B of E will almost undoubtedly cut too.

But that is why the £ has fallen so much. Economists talk of our interest rates going as low as the US's too, and therefore we have greater scope for more cuts, that is why the £ seems so unnatractive to investors.

 

[Lokki 7]

But that is why the £ has fallen so much. Economists talk of our interest rates going as low as the US's too, and therefore we have greater scope for more cuts, that is why the £ seems so unnatractive to investors.

The UK moving into recession makes investors want to sell their UK assets and move their capital out of the country, hence selling £'s. The US is once again (surprisingly) being seen as a safe haven and so much of the outflows from Sterling are going into Dollars.

 

[aftershavedave]

The UK moving into recession makes investors want to sell their UK assets and move their capital out of the country, hence selling £'s. The US is once again (surprisingly) being seen as a safe haven and so much of the outflows from Sterling are going into Dollars.

the only silver lining to this particular cloud of course being those who ignored the hype (on here particularly) to lock into high fixed rate deals and go for base rate trackers!

 

[Lokki 7]

the only silver lining to this particular cloud of course being those who ignored the hype (on here particularly) to lock into high fixed rate deals and go for base rate trackers!

Indeed. I've seen a UBS analyst report that UK base rates will be 2% by mid-2009. That is the time to fix for 5 years.

 

[User removed 4]

The reason sterling has fallen so steeply against the dollar ?................. more sellers than buyers ! and lokki 7 , im very surprised you didnt refer to it as cable

 

[Garage_Doors]

Heres a forecast that it will climb till the end of the year.

Provided by British Pound to U.S. Dollar Currency Exchange Rate Forecast

Or course if it was reliable we would all get rich !!!

 

[Bozza]

Heres a forecast that it will climb till the end of the year.

Provided by British Pound to U.S. Dollar Currency Exchange Rate Forecast

Or course if it was reliable we would all get rich !!!

That they predicted 1.77 for October and we're in the mid 1.50s, is not giving me much faith in their reliability.

 

[simmo]

The UK moving into recession makes investors want to sell their UK assets and move their capital out of the country, hence selling £'s. The US is once again (surprisingly) being seen as a safe haven and so much of the outflows from Sterling are going into Dollars.

This is not right. The US is in recession too. It is a global phenomenon. The US$ has also done well against the euro too in the last few weeks because the fed has no more (or very little scope) to cut any further i.e the dollar was as low as it almost can possibly be when it was $2+ to £1. Both the Euro and £'s central banks have more scope to cut than the Fed.

Low interest rates discourage (overseas) investors to put their assets into a country's currency because they get very poor returns on their money.

A safe haven in times of economic crisis has always been gold, as it is a tangable asset.

 

[bhafc99]

Indeed. I've seen a UBS analyst report that UK base rates will be 2% by mid-2009. That is the time to fix for 5 years.

Only if LIBOR rates, and thus mortgage offers, start to mirror the base rate again. Despite the 0.5 rate cut the other week, few mortgage lenders cut what was on offer. Many even withdrew trackers, or put its 'above base rate' element up.

One commentator even pointed out that the BoE can't carry on cutting rates if this disconnect isn't tackled – they'd end up looking powerless. It would batter consumer confidence even more if we saw the base rate going down by half point after half point, yet lenders continuing to make only token gestures, if any.

(Putting aside the fact that mortgages aren't the only thing influenced by the base rate of course.)

 

[Lokki 7]

That they predicted 1.77 for October and we're in the mid 1.50s, is not giving me much faith in their reliability.

There are some better forecasters out there. Gavin lent me this book a few weeks ago, well worth a read.

Amazon Online Reader : "Dow, 30,000 by 2008" Why It's Different This Time - Second Printing

 

[User removed 4]

This is not right. The US is in recession too. It is a global phenomenon. The US$ has also done well against the euro too in the last few weeks because the fed has no more (or very little scope) to cut any further i.e the dollar was as low as it almost can possibly be when it was $2+ to £1. Both the Euro and £'s central banks have more scope to cut than the Fed.

Low interest rates discourage (overseas) investors to put their assets into a country's currency because they get very poor returns on their money.

A safe haven in times of economic crisis has always been gold, as it is a tangable asset.

I would argue that the fed has plenty of scope for rate cuts, the japs went to 0% in the nineties.

 

[User removed 4]

There are some better forecasters out there. Gavin lent me this book a few weeks ago, well worth a read.

Amazon Online Reader : "Dow, 30,000 by 2008" Why It's Different This Time - Second Printing

 

[Lokki 7]

This is not right. The US is in recession too. It is a global phenomenon. The US$ has also done well against the euro too in the last few weeks because the fed has no more (or very little scope) to cut any further i.e the dollar was as low as it almost can possibly be when it was $2+ to £1. Both the Euro and £'s central banks have more scope to cut than the Fed.

Low interest rates discourage (overseas) investors to put their assets into a country's currency because they get very poor returns on their money.

A safe haven in times of economic crisis has always been gold, as it is a tangable asset.

Much of what you say is correct, but interests rates are not the sole determinant of FX rates. For example, Japan has the lowest domestic interest rates yet is seeing record rises in the Yen due to speculators unwinding massive carry trades.