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£ strengthened


idun
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I do not understand exchange rates at all and the way the markets are literally are played.  Never have, never will.

For some reason beyond my imagination the £ has strengthened over the past week or so.

Now, I suppose that the most negative comments I hear about the UK are in general on here, and post brexit, I sort of imagined that the £ would remain rather low.

Anyone any ideas? Is it this vaccinations debacle in the EU that has made that difference, or the budget, which is also beyond me, as I had thought that we would be paying a lot more in taxes or in some other way.

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OK, here goes ......... but I’m perfectly prepared to be shot down in flames by anybody who knows better.

I once naively thought that the obvious principal factors in the strength (or weakness) of a nation’s economy would be what would drive the strength of the currency. Thus GDP, employment, etc, etc.

I was told that whilst all those things are factors, they are trumped by the strength of the US Dollar. If that strengthens, sterling strengthens.

With the departure of the clown Trump, I believe that the $ has indeed strengthened and therefore .........

I rather doubt that the success of the UK vaccination programme has anything to do with sterling’s rise. Plus, we shouldn’t get too carried away. We’re still some way off of €1.20 interbank aren’t we?

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A combination of:-

A slight rise in inflation prompting a possibility of a rise in interest rates.

A rapid rollout of covid-19 vaccinations meaning lockdown will be lifted sooner rather than later with a resultant boost to the economy by releasing £100 billion of UK savings amassed due to covid.

Chancellor's budget more positive with support and investment than the markets were expecting.

Up and until today the $ has been rising and the £ has been trailing this rise.

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So the  EU including ofcourse, Germany, doesn't count in the ways this is dealt with by the markets?

If that is the way it is, it is.

We are worse off when this happens, but when we returned to the UK, I never expected the exchange rates to be what they ended up being. Whatever they are, we will just get on with it.[blink]

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[quote user="cajal"]

A combination of:-

A slight rise in inflation prompting a possibility of a rise in interest rates.

A rapid rollout of covid-19 vaccinations meaning lockdown will be lifted sooner rather than later with a resultant boost to the economy by releasing £100 billion of UK savings amassed due to covid.

Chancellor's budget more positive with support and investment than the markets were expecting.

Up and until today the $ has been rising and the £ has been trailing this rise.

[/quote]

I agree with the points, but the £ has been rising since january well before the budget, and has also risen almost 20 cents against the dollar in the last 9 months, rather than training it. Its voodoo!!
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Each to his own of course but for me the rise (or fall!) of the stock markets is far more important than the exchange rate. When I moved to France the exchange rate was around 1.54 to the pound. In the intervening years that is quite a drop but more than compensated for by a good rise in the stock market, notably the FTSE. Now the rate is at, or around 1.16 I don't think is too bad. We tried the French bourse when we first came but it is quite lamentable and gave up on it.

Things are beginning too pick up across the board after a fairly hard year. Can only hope the improvement continues.
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Well that 1.54 euro conversion was not far off  how I used to consider the FF to the £.

10ff to a £. During our time, we had far worse and far better than that, but to me, it was a happy and easy conversion.

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The exchange market likes stability even if that stability doesn’t have a positive effect on the economy. The strange fact is however that for post Brexit Britain to thrive economically it will need a ‘poor’ exchange rate making its exports attractive to overseas buyers and its imports expensive for consumers at home.

Governments do have means of controlling exchange rates. Interest rates are a simple example, raise interest rates to above those elsewhere and your currency will be in demand, people will want to buy it to invest and rates will rise. Lowering interest rates does the opposite. A strong currency is not always good news.
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Yes, we too calculated in roughly the same way. It wasn't a great surprise when the euro arrived to find prices on many thing had skyrocketed! I collect money ( as a souvenir) when I travel and still have several FF notes. Ah, memories!
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I realise that the french government insist, well the 'dubious' insee insists that prices did not particularly rise post €.

Insee and govt staff were obviously not shopping where I shopped[:-))] and yes, this was discussed by my entourage in France a lot over the following few years and even now, a friend harps on about how things went up post €.
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It may seem a little strange but I do clearly recall that prices hiked across a number of things one of which was the price of a haircut!! I suppose it is just too good an opportunity to be missed, by some anyway.

I seem to recall that when Britain went 'metric' there was the same outcry.
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