The Pounds Recovery?

by **lepidoptra** » July 1, 2010, 8:48 am

Looks like the GBP's recovery was short lived as it begins it's decline against all other major currencies yet once again

by **arjay** » July 1, 2010, 8:58 am

Lepi, there will inevitably be ups and downs, resulting from various financial news and expectations. yes, it dropped back a bit yesterday, after the previous several days gains, but it is still UP on a month ago.

There is an expectation that Thai interest rates will rise, which may work against the £ there, but similarly an expectation that UK interest rates will rise around the end of the year, and I believe markets realise that UK plc has taken steps to cut it's borrowing and is putting its house in order.

by **lepidoptra** » July 1, 2010, 9:28 am

Hi Arjay
I always admire your optimism on this subject but if you remember a couple of years ago when the pound was worth over 60 baht we had a similar conversation. I just worry that us older expats will never live long enough to see any significant benefit . Wouldn't the 74 baht be wonderful if we could ever see that again? Alas those days have well gone.

Regards

by **Bandung_Dero** » July 1, 2010, 11:19 am

Here is an idea of what has happened to the GBP against the Baht since July 2003, not a pretty picture and IMO there will be no dramatic move North for many years. I might post an update of this every few weeks for the wishful thinkers.
Compiled from data on xe.com.

Mods can you delete the post above please, not a good link.

by **lepidoptra** » July 1, 2010, 11:30 am

Bangdung
Good idea but I'll have to increase my dose of anti-depressants

by **udonuk1** » July 1, 2010, 11:36 am

it can only go up ?

by **trubrit** » July 1, 2010, 11:49 am

Well as all the Thai banks are closed today for stock taking , or is it taking stock. It is possible the exchange rate is naturally lowered in case of drastic movement in the market, as happens most Fridays , I have observed. That's why I never change currency at the weekend .Tomorrow hopefully we will see a continuation of the small , but upward trend . $\:D/$

by **lepidoptra** » July 1, 2010, 1:52 pm

hi Trubrit
I must be missing the point. The pound got weaker with the Euro and the US dollar today. Now it does appear if the pound gains against the US dollar it will then gain against the baht. So in effect if the Thai banks are stock taking today the pound will drop against other currencies until of course next Monday when I'm looking forward to 50 to the pound.
Kind regards

by **trubrit** » July 1, 2010, 4:28 pm

lepidoptra wrote:hi Trubrit
I must be missing the point. The pound got weaker with the Euro and the US dollar today. Now it does appear if the pound gains against the US dollar it will then gain against the baht. So in effect if the Thai banks are stock taking today the pound will drop against other currencies until of course next Monday when I'm looking forward to 50 to the pound.
Kind regards

I was of course commenting on the behaviour of Thai banks that I have observed every weekend and long holiday periods .
It is nothing to do with the international market . It seems as though they are hedging their bets in case of a fall over the period they are closed . As an aside I don't think the 50 is far off now we have a government that seems able and willing to do something , not just talk Lets hope . [-o<

by **arjay** » July 1, 2010, 11:39 pm

Oh yea of little faith. By the close of trading today, the £ was up again against most currencies, one exception being the Euro which had had a better day, but it was still higher against all currencies than it was one month ago!!

£ to US $ = 1.51030
£ to Thai baht = 48.9008
£ to Euro = 1.21290

by **KHONDAHM** » July 2, 2010, 8:39 am

lepidoptra wrote:Hi Arjay
I always admire your optimism on this subject...

I had to chuckle at that. Given a choice between the two, I'll take a cup of realism over a tank of optimism any day. - lol

by **arjay** » July 2, 2010, 9:30 am

lepidoptra wrote:Hi Arjay
I always admire your optimism on this subject...

Khondahm wrote:I had to chuckle at that. Given a choice between the two, I'll take a cup of realism over a tank of optimism any day. -

Ironically, I'm not an "optimist", much more of a "realist", about things. :lol:

I have tended to be "optimistic" about sterling, (as Lepi commented) because I felt it had fallen too far, and there were a combination of reasons (previously detailed) why I felt it should recover, and so far it has been doing so (and for the reasons I gave!).

I think there is also an element of, if other currencies have problems e.g. lately the Euro, then by default one or more of the other major currencies tend to do better, if only by default. I think the Dollars improvement over the last few months was because of the Euros weakness. Currently, there seems to be "renewed realisation" that all is not well in the US and the Dollar is suffering some weakness. Hence that will help the pound.

Incidentally I do agree/feel that the Asian currencies will do well/remain strong and there will be a tendency for them to pulled up by the floating/strengthening Yuan.

I only wish I had put big money into the Swiss Franc 30 years ago and Gold 10 years ago. :lol:

£ to $ = 1.5181 this am
£ to baht = 49.1387
£ to Euro = 1.2122

by **JimboPSM** » July 3, 2010, 10:15 am

These two charts of the GBP against the THB and the USD for the (approx) 6 weeks from its low for the year against both currencies on the 19th May show the GBP has had a “steady” recovery of 6.5% against the THB and a virtually identical 6.3% against the USD.

GBP / THB - 19 May 2010 to 2 July 2010

: 2010.5.19 GBP-THB.jpg (69.67 KiB) Viewed 164 times

GBP / USD - 19 May 2010 to 2 July 2010

: 2010.5.19 GBP-USD.jpg (61.64 KiB) Viewed 164 times

Note - my daily charts are based on the final rates at the close of each bank business day in Thailand.

The GBP briefly fell below the psychological level of 1.50 (approx 24 hours) during the week against the USD (mainly on profit taking and linkage to further EUR speculation) but then rapidly regained its (current) upward momentum as shown in this chart:

GBP / USD - 28 June 2010 to 2 July 2010

: 2010.07.02 GBP-USD 5D YF.jpg (102.09 KiB) Viewed 164 times

Currently I see very little (in overall economic and financial terms) that in the short term is likely to halt the upward momentum of the GBP - it is one of the very few countries with a government with the courage to inflict the necessary pain on its electorate that addressing its fiscal deficit will entail.

Failure to address fiscal deficits ultimately leads to a devalued currency which, in the long term, is actually more painful to the electorate.

There are many factors influencing currency rates and care should be taken not to over-interpret short term movements as there are frequently major influential factors which are not readily apparent (e.g. shorting, misreporting by the media and the “planting” of misinformation in the media) which grossly distort the exchange rate and its movements

As regulatory supervision of stock markets around the world has become increasingly more effective some of the financial cowboys have moved on to the easier pickings of the currency markets where regulatory enforcement is virtually non-existent

by **arjay** » July 4, 2010, 9:57 am

Some further background information about the rise/recovery of sterling, though agreed the article is primarily focussing on sterling's relationship with the Euro.

Will the pound surge against the euro?
By Ed Monk
29 June 2010, 10:41am

The pound has hit its highest point against the euro for 19 months, breaking through a key technical barrier after a strong hint from MPC Member Andrew Sentence that interest rates may have to rise. So is the pound about to surge against the euro?

In the first interview with an MPC member since the Budget, Sentance, who voted in favour of an interest rate rise this month, said the fiscal plans were much as expected and did not change his view that it was time to start gradually withdrawing the extraordinary stimulus now in place.

That prompted a jump in the value of sterling, while the euro continued its downward trend.

So what has been going on?

A combination of renewed fears over the eurozone debt crisis and a new found confidence in the UK economy following the emergency Budget last week has underpinned a sterling rally against the European single currency.

A round of debt repayments to the European Central Bank (ECB), due this week, as well looming debt auctions among indebted eurozone nations have added to the uncertainty.

Banks in some of the worst off countries are expected to use the three-month tender being held this week to repay the ECB a year after taking on bargain loans as part of central bank's liquidity scheme, potentially leaving a shortfall in liquidity among banks.

Markets would take that as a sign of stress in the banking sectors of eurozone countries.

In this context, the pound is becoming viewed as a safe haven in Europe, particularly after the Coalition government's emergency Budget laid out plans to reduce the UK's budget deficit more quickly than markets had been demanding.

Further good news for sterling was to be found in the minutes of the latest Bank of England (BoE) policy meeting. The minutes of the June meeting showed one of the eight Committee members, Andrew Sentence, voted for an interest rate rise to 0.75%, stoking speculation rates could rise sooner than expected.

Mr Sentance reiterated his feeling again on Monday, prompting a jump in the value of sterling. Higher interest rates make the pound a more attractive investment and tend, therefore, to increase its value.

What has been the result?

The pound hit a 19 month high against the euro – rising to €1.2330 on Monday, it's highest level since November 2008. Meanwhile, the euro fell to a lifetime low against the Swiss Franc, another 'safe haven' currency.

Will the rally continue?

Currency eggheads said that the latest rise is significant because it take the euro below previous 'support levels' against the pound. Having fallen below previous support levels at €1.2225 and €1.2301, the euro may fall to €1.236 – with further falls to come.

Jane Foley, head of currency research at Forex.com, told Reuters: 'It is feasible that sterling will continue to gain against the euro so long as the euro remains dogged by bad news, particularly in the banking sector, and budget deficit worries.'

The latest falls took the euro below the 50% retracement of the euro's trough-to-peak move from early 2007 to late 2008, located around €1.2234 - €1.2225.

Some in the market say a definitive breach of this level would spur sterling again.

Read more: http://www.thisismoney.co.uk/markets/ar ... z0sg5FLh9p

Exchange rates at the end of last week:
£ to Dollar = 1.52010
£ to Euro = 1.20980
£ to baht = 49.2589

by **cookie** » July 4, 2010, 10:25 am

arjay,
are you no longer using the Bangkok bank exchange rate as reference??

Bangkok Bank Thailand 2010-07-02 01:30 1 GBP THB 48.39

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