The dollar and the GBP
 

Because of gomiki's thread about the Euro, I decided I'd better check to see what was going on with the Pound. According to the web site I just checked, it's at $1.43 today! Is it not going to shoot up as a result of the "dumping" that's driving up the Euro? Or has it just not happened yet?

I've been so pleased with the exchange rate we've gotten on the things we've had to purchase ahead for our June trip. We still have two or three more things we need to buy (train tickets and two tours). Should I rush to take care of them now?

Anyone who answers your question with a prediction about the £:$ relationship - except that it's unpredictable - is a fool, a charlatan and would be more honestly employed wearing a gypsy costume and staring at a crystal ball.

There's simply no way of telling what's going to happen with these two currencies. So you need to decide whether it's more important to you to have the certainty of having paid for things (because then there'll be no surprises) or to keep the money in your account, gaining what passes for interest these days.

I didn't put that damnfool icon in my answer. I tried to do a "£" ":" "$", meaning 'the dollar to the pound relationship'

Hi cap,

I think that the UK is trying to keep the GBO from falling to par with the Euro, so you should see it rising along with the Euro.

Don't you get better prices (discount fares) if you book your trains ahead of time?

((I))

CAPH52: You should still be pleased w/ the exchange rate. yesterday it briefly went up to $1.45+ but today it is easing back again. A year ago today it was $1.99!

I figure anything around $1.50 and below is a REAL bargain. In the 5 years I lived there the £ ranged from $1.47 (very briefly) to nearly $2.50 (now THAT hurt)

So in perspective today's rates look terrific to me.

It isn't $1.37 like it was a couple weeks ago -- but what the hey -- most everything costs about 25% less in US$ terms than in March '08.

I certainly understand what you're saying, flanner. And I agree that, in a general sense, no one really knows what will happen. But what I was getting at (and clearly not stating it well) is whether the rise of the Euro in relation to the dollar means anything in terms of the Pound? Or maybe I should say, since the dollar is weakening against the Euro, does that mean it'll weaken against every currency, including the Pound?

Actually, Janis, I'm very pleased with the rate I saw today! After seeing what had happened to the Euro, I was expecting to see the GBP much higher today. And that's why I'm wondering whether I should jump on those train tickets, etc., right away.

I know there's nothing I can do about what the rate is when we're there so will try not to even think about it. Although I certainly hope it's not the $2.50 you mention! But since some things do need to be bought ahead anyway, I figure I may as well try to time it as well as I can!

Yes, Ira, I've been told the optimum time to buy train tickets is 8 to 12 weeks ahead. And this past Monday was the 12 week mark. Judging by what I've been told, if we buy during that window, we're likely to save money over buying the day of, no matter what the exchange rate is. But if it's likely to be heading up sharply in the next few days, I'd rather buy them now! However, we do have time left. And I hate to do things in a rush. Seems whenever I do, I wind up realizing later that I didn't make the best decision for the situation.

Thank you both for your input!

Foreign exchange markets' attitudes to the pound are closer to their attitude to the US dollar than to the Euro.

Britain is committed to quantitative easing, and to low interest rates, much as the US is. In the short term, these two features depress the £ and $ against the €. Britain has no exchange rate policy at present: the official line is that what we lose by costlier holidays in countries that use foreign money (more an essential of life in Britain than in any other country in the world except Sweden and Denmark) we gain by cheaper exports and higher repatriated profits. Savage devaluation in 1992 turned the economy around.

Whether that insouciance would survive the media frenzy if the £ dropped below € parity remains to be seen. Personally I think it would. The British electorate is highly sophisticated when it comes to international finance, and realises that an expensive pound almost always kills British jobs.

Very interesting, Flanner! Thank you.