Why is the pound now falling against the euro?

[Sprogster]

Quillan, the fact is that EU growth is being driven solely by Germany and France's growth is anaemic by comparison. Also you cannot ignore the individual members, as the more there is divergence between Germany's growth and other EU members, the more risk that Germany walks, as their voters are not prepared to carry passengers.

[Quillan]

So should we view America as individual states?

[mint]

http://www.ft.com/cms/s/0/261e3018-a6fa-11df-90e5-00144feabdc0.html

This is the latest account of the situation that I can find.  I am a great fan of the FT so I do go there for financial news.

[Jako]

[quote user="Sprogster"]Quillan, the fact is that EU growth is being driven solely by Germany and France's growth is anaemic by comparison. [/quote]

Every time the UK produces better-than-expected quarter-on-quarter figures it is only because the previous quarter is adjusted down. Just like in the US the UK is using this trick to manipulate the sentiment.

In the Euro-zone, most figures are better-than-expected despite an upwards revision of the previous quarter.

So in fact the French 0.6% growth is better than the UK's 1.1% 'growth' . ( as is obvious in the y/y figures)

UK 'growth' is just a statistical anomaly caused by manipulating the figures and high inflation. ( less goods, bur more expensive creates 'growth' ) I am not even convinced that the UK is out of recession yet.

There is hardly any inflation in the Euro zone, interest rates are higher than in the UK and every member is growing (real GDP growth, not  inflation ), with the obvious exception of Greece. Stating that growth is solely driven by Germany is contradicted by facts.

[mint]

But the policy is really to let the pound plummet:

http://www.ft.com/cms/s/0/66b2fe60-a6f5-11df-90e5-00144feabdc0.html

[Quillan]

I'm still waiting for the Euro to collapse, I've been waiting three years now or is it longer. I seem to remember somebody posting 4 months back that according to well known authoritative financial bods it was going to disappear in a matter of weeks and lets not forget those that said Greece wouldn't make any attempt to pay back any loan. I'm just glad I never gave them any of my money to look after. [:P] Seems to me these people couldn't find their way out of paper bag even with a map, compass, torch and big illuminated sign saying Exit. [:D] Remember those that said it would be around 1.40 'ish' by this time, total waste of space the lot of them, a pox on them all. [:'(]

[mint]

Q, I don't need convincing that the official bods really do want the pound to fall against all major currencies so that inflation alone will take care of the monetary deficit.

Problem solved at a stroke.....who wouldn't be tempted?

[Quillan]

Yes, true enough but then think of all the others it is hurting by giving false hope. There are people who believe this lot (and on the face of it why shouldn't they, I mean they are supposed to be professionals after all said and done) and have been borrowing money to 'hang on' in there within both France and Spain (probably other Euros countries as well) believing the exchange rate would get better, they can pay off the debt and carry on much as before. Unfortunately that's not going to happen in the near or even distant future and they are just getting deeper and deeper in to debt and do these bods care, no of course not. [:@] Not to mention that some of the FT writers would be better off working for the DM as they seem to have about the same amount of intelligence and imagination.

[velcorin]

Nothing wrong with a bit of inflation 1-2-3%. Without it you get deflation, when companies/people stop capex/buying, coz they know it will be cheaper next week, and then the whole national econmy grinds to a halt. Like Japan.

FTSE is doing OK, bonds doing OK, company profits and liquidity sky high, unemployment stable/decreasing. What's not to like?

Sept/Oct could be interesting. Sarko/Lagarde are being forced to announce how they will tackle the French deficit, which is ballpark the same as the UK, and started at a much, much higher level. To date they've fudged things, but the Germans have told them put up. or shut up. Don't plan on going anywhere, coz I don't think the CGT will let you[:D] Announced so far 23 rurale hospitals closing (yeah, right[;-)]), pension age up, lecky up 25% over 2 years, cancelling the CGT proposed decrease on second homes (tough luck guys, it was going to be cancelled!), unspecified "substantial" increases in local household taxes. Some of these are actually counterproductive, but heyho when has anything a politician said been the truth. Expected. Nothing, they'll tell the Germans to stuff it, and fudge things again. EUR will be hit, unemployment up, Sarko picks a new bunch of foreigners to blame.

[mint]

And, sure enough, it's nosediving at the moment if anyone cares to check......

[velcorin]

It could be revealing (politically) how the UK press handles this http://www.leparisien.fr/flash-actualite-economie/moody-s-quatre-pays-dont-la-france-s-approchent-de-la-perte-de-leur-note-aaa-17-08-2010-1034630.php

Basically the French press are saying that Moodys say that FR/DE/US/UK are all in the same boat. Wonder how the BBC will play the story?

[Quillan]

Strange I thought, and perhaps in conflict with some of the comments already made, inflation in the UK has not dropped to where the BofE thought they ought to be. Whilst prices in supermarkets have risen by 4.8% (BBC news tonight) this has been offset by other things like house prices falling due to less demand for more supply and does not quit tally with what the experts say. I don't think, with respect, that they really have a clue. I often thought some time back that supermarket prices would rise taken that a lot of stuff is produced in Europe (Spain for example for fruit and veg) and that in the end they would have to be paid for in Euro's and that the poor exchange rate would finally catch up with them and prices would rise. They (the experts) pump out figures and manipulate them to fit their argument or point of view. Basically the UK is in the same position as everyone else (somebody did point this out earlier) and it will be interesting what happens from a government point of view. What does seem clear to many and is common sense really is that the UK, like many other EU countries, is living beyond it means. This does seem to be the common denominator when I talk to my guests from other EU countries who seem to see the same problems in their countries and like it or not the UK is part of the EU and not part of the US. The only (sadly) difference is that the UK does not use the Euro.

[allanb]

[quote user="Quillan"]I don't think, with respect, that they [the experts] really have a clue[/quote]

I think you're right.  Unfortunately they are paid to give the opposite impression.

Here is the correct answer, which you can adapt to fit any situation.  Select only one in each case:

The [ pound / dollar / euro ]

has [ gone up / gone down / remained steady ]*

against the [ pound / dollar / euro ]**

because that's what the market now thinks it's worth.

Since nobody will ever be able to say you're wrong, you will quickly become known as a real expert.

* for a bit of variety, more dramatic words may be used instead, e.g. "crashed", "collapsed", "soared", etc.

** don't select the same currency here as you did the first time.

[Quillan]

I like the 'Bird and Fortune' sketches about international banking, they really make me laugh, perhaps that's because they are nearer the truth than we first think. [:D]

[mint]

What I have noticed is that the rate starts nice and high in the morning, then dips throughout the day and is at its lowest in the early evening.

Then, late at night, like now, the rate goes back up.

I have noticed this particularly in the last few days as I am looking to change a largish sum of money.  I find this strange tendency very off-putting but, as long as it stays above 1.20, I can live with it.