Euro - sterling lowest rate this year

[Cat]

Eeek, the exchange rate has gone down to 1.41, the worst this year!

[DerekJ]

I've seen predictions it may drop to around 1.37. A lot will depend on what the Bank of England do about interest rates but on the news today the prediction was that they would drop interest rates in the new year... that would almost certainly push down the Pound/Euro rate.

If that happens we may curtail our next planned house hunting trip in March.

[powerdesal]

[quote user="DerekJ"]I've seen predictions it may drop to around 1.37. A lot will depend on what the Bank of England do about interest rates but on the news today the prediction was that they would drop interest rates in the new year... that would almost certainly push down the Pound/Euro rate.

If that happens we may curtail our next planned house hunting trip in March.

[/quote]

The BoE dropping interest rates would be a hell of a gamble, they want to try to curtail the credit frenzy that seems to be prevalent in UK. A reduced rate would send completely the wrong signals.

[DerekJ]

[quote user="powerdesal"][quote user="DerekJ"]I've seen predictions it may drop to around 1.37. A lot will depend on what the Bank of England do about interest rates but on the news today the prediction was that they would drop interest rates in the new year... that would almost certainly push down the Pound/Euro rate.

If that happens we may curtail our next planned house hunting trip in March.

[/quote]

The BoE dropping interest rates would be a hell of a gamble, they want to try to curtail the credit frenzy that seems to be prevalent in UK. A reduced rate would send completely the wrong signals.

[/quote]

However, that seems to be exactly the signals the BoE have given to analysts. They are toying with the dilemna of a slowing economy and want to boost that by dropping interest rates .... whilst still aiming to hit their target inflation rates and apparently the signals they gave are that they can achieve both.

[Logan]

The current talking down of the pound by the B of E and others has everything to do with the Dollar. The low value of the Dollar is very significant to the UK since America is a major trading partner in service industries. It suits the UK economy to have a low valued pound against the Euro AND the Dollar. I do not believe the B of E. There are major inflationary pressures in the UK coming on stream and reducing interest rates is a joke. It aint gonna happen. The City seem to have fallen for it though and marked down Sterling. I personally don't believe it!

[AnOther]

As bad as it looks from the raw numbers since a low of 1.38 in mid 2003 it's actually been bumbling along within a window of around 8% which, whilst not insignificant, doesn't sound quite so calamitous.

I have to say that I do feel for a certain poster here who is paid in $ but needs to buy €, a massive double whammy [:-))]

[DerekJ]

I think a lot may also depend on what the European Central Bank does with interest rates. There is talk of them increasing the rate in the near future. This, again, would have a negative effect on the Pound/Euro rate however, I've also seen mentioned the possibility that they may need to reduce the rate in the new year. From a potential house buyers perspective a swing of a full point (from when we first started house hunting) represents quite a large increase in the cost to our UK assetts.

[Logan]

The B of E must be fairly certain there is likely to be a collapse of demand in the UK economy next year. How else could they reduce interest rates in the teeth of roaring inflation? The weak dollar is very damaging to everyone except the US. If the euro continues to rise against every major currency the ECB will need to act and reduce eurozone rates. However this is all very familar. Remember the strong DM in the 1980's and all the eventual damage that did to the european economy. The ECB is always frustratingly very slow to react to market trends. So in my view any investments outside the eurozone in the coming short term are likely to be dire.

[Benjamin]

Two or three days ago I calculated the average exchange rate we had received for transfers from the UK for this year. These are fairly small amounts about four times a year. The answer came out at 1.45€/£.

I've just looked back at 2006 and the answer was 1.45€/£, and for 2005........1.45€/£.

Keep your fingers crossed. [6]

[Llwyncelyn]

Steve a credit frenzy back in the UK is not a fact of life.  Spending is down house sales and values are dropping a little Barclays Bank today have written off £1 billion in secondary lending on US mortgage deals.  Credit card rates are going up and yes madness will come into play for Xmas but the months after will be amongst the toughest we will have seen.

Then EMAP is off loading its pensions to another provider C and W my old company is doing likewise and its shares are down to £1.75 from a height of when I sold of north of £15.

Life is a changing in the UK.

From our part we have sold here in Normandie and moving elsewhere and some monies going back home so a good rate.  Indeed when we bought in 2001 the rate was 1.675 euros.

The market changes and watching a programme today it said it made sense to keep a 'pad' in the UK just in case anything went wrong?

Add to that greve en France so where should we put our heads?

rdgs