Pound at $1.56 and Sinking Daily? How Low Can It Go?
 

Last i saw the British Pound was at $1.56 US - not long ago was well over $2

great news for tourists from America to one of the world's most expensive places IME

but how low can it go

Should i snap up pounds now for my annual Feb sojourn - assuming i can fetch a good rate?

What happened to that robust British economy FodorBrits were crowing about not long ago?

The pound is going down with the dollar. I'd buy something else :D

PalQ-
<i>Last i saw the British Pound was at $1.56 US </i>

That was a day or 2 ago already. Today it's up to $1.64.

You missed your chance.

I reckon we can assume currency rates to yo-you around for a while in the present atmosphere.

Patrick - then folks who bet on currencies can rake it in say they have some expert knowledge as to the yo-yo's?

Not everyone is George Soros, and I bet he makes mistakes too. My limited understanding is that a lot of the speculation is on very short-term movements. Most of us just don't have the time or the inclination to do the same for our holiday money.

Poland and Hungary and other non-euro zone countries are regretting that they are not in the Euro Zone or could not yet qualify since their own currencies are suffering even more against the dollar - loans they got in dollars now need be paid back in higher dollars

Even Denmark is regretting apparently not going into the Euro Zone when it could have - for the same reason

I wonder if this may spark the UK to join the euro zone - the bigger the entity the more immune perhaps the currency is to rapid devaluation in times like this.

You can keep the Queen's mug on the coins you know.

A lot of countries, such as Hungary had loans in Yen, or Swiss Francs because of the low interest rates charged and good exchange rates, but now they are high against everything else these loans are proving very expensive. People with Yen mortgages are paying a monthly repayment something like 4 times what it was 6 months ago. Ouch!

Anyone who thinks they have expert knowledge right now is delusional.

There was never a case for Hungary joining the Euro: the Zone simply wouldn't let it in. And the Zone was manifestly right on this occasion.

We don't know whether the euro is going to be able to maintain itself: don't forget the fiscal rules have to be implemented by however many different governments, who face different financial and political circumstances, while the &quot;one size fits all&quot; central bank rate might not equally fit all countries' needs.

Exchange rates are only one part of the picture.

&lt;There was never a case for Hungary joining the Euro: the Zone simply wouldn't let it in. And the Zone was manifestly right on this occasion.&gt;

There was never a case for Italy joining the Euro: the Zone simply shouldn't have let it in. And the Zone would have been manifestly right on this occasion.

&quot;The zone&quot; was France and Germany, denying Italy access wasn't an option. Greece got in by providing faked figues.

How many of the Euro Zone countries, such as France and Germany, would qualify now if the same criteria were used as they did when the got in.

Neither i bet - you then have to water down the criteria, which would now be necessary for Britain to gain Euro stature.

Ireland for one is lucky i think it has the Euro. Scotland probably wishes it were in Euro Zone as well.

&quot; Scotland probably wishes it were in Euro Zone as well.&quot;

EH??

Scot Nats have spent most of the past 15 years complaining the pound's overvalued. London government fixing interest rates for the convenience of London home-owners, not for honest Scotch owners of inefficient factories. Now it's (possibly) falling against the &euro; they ought to be delighted.

Seems not long ago some Socts Nationalist said that 'Iceland was a great model for an independent Scotland'

and then recently Britain bailed out two Scottish banks at a cost of more than the total Scottish Parliament budget.

&gt;would qualify now
Germany (after a few years, where it wouldn't), Netherlands, Luxemburg, Austria, Finland, Malta :-).

But that's not the problem right now. It may take years, before there's any danger for the Euro falling apart.

The total destruction of the dollar and the pound in a few months or weeks is what people fear. And they have a point.

Just like Helmut Schmidt said. This guy has been Chancellor and finance minister over decades, engineered the &euro; and is still pretty clear in his view of the &quot;anglo-saxon banking system&quot;. It's bitter to see when things are happening as expected without any chance of repairing them.

<i>Even Denmark is regretting apparently not going into the Euro Zone when it could have - for the same reason</i>

Why?

The kroner is basically pegged to the Euro. As of today, the EUR/DKK fx rate is 7.4552. This compares to an average EUR/DKK fx rate since 1/1/2007 of 7.4542. That is pretty darn pegged.

And there is no easy arbitrage opportunity here either. Setting both the 1/1/2007 USD/EUR and USD/DKK fx rate to 1, today the USD/EUR fx rate is now 1.0563 compared to 1.0517 for the USD/DKK fx rate.

The Danish Kroner has simply not lost any value against the Euro and it's losses against the dollar have pretty much exactly tracked the decline in the Euro.

In addition to a few African states, (former French colonies), the currencies of Denmark, the baltic States and Slovakia are pegged to the &euro;.
Bulgaria and Bosnia were pegged to the Mark and now are also pegged to the &euro;.

For some perspective, when I lived in London in the early 70's, the rate was $2.60 . .

One day when I was passing thru for a meeting ( mid to late 90's I think ) the rate was $1.05.

Trends are not that hard to detect, but anyone who tries to predict the short term changes is takeing a hugh risk

Back to $1.66 today