Pound dropping.

[wayneg]

Just been watching exchange rate, anyone know why it dropping so fast?
From Yesterday to today its dropped from 1.992 to 1.9646, has some bad news been announced?
Hope its bottomed at this.

 

[wifey]

Just a guess here... it could be something to do with the G8 meeting pledging all that money or the financial pages need a quick viewing to see what else is afoot

 

[scottishsue]

If you go into

www.crowncurrencyexchange.com you can see the way the rates are going up and down. It's showing $1.97 by September and $2.00 by next March.

 

[Obi Wan Kenobi]

Bank of England holding interest rates.
Money men like the rate to go up, not go down or stay the same.

Plus the threat of a national postal strike.

"The dollar hit two-month highs against the euro and sterling on Friday as rising bond yields continued to put pressure on global equity markets.

The dollar rose 0.3 per cent to $1.3380 against the euro and climbed 0.5 per cent to $1.9675 against the pound.

“In bouts of risk aversion the dollar has in recent times tended to do well as US investors who have been active in investing abroad either stop or reverse some of these outflows,” said Derek Halpenny, economist at Bank of Tokyo-Mitsubishi UFJ.

The dollar also advanced against the yen, climbing 0.2 per cent to Y121.20.

However, the yen rose against the euro and sterling, climbing 0.2 per cent to Y162.14 and 0.4 per cent to Y238.44 respectively.

Analysts said rising risk aversion had prompted investors to trimmed back carry trade positions, in which the purchase of riskier high-yielding assets is funded by selling low-yielding currencies such as the yen.

However, Adrian Schmidt at Royal Bank of Scotland said the sell-off in carry trades had so far been quite modest.

“The rise in bond yields in recent days and the decline in equity markets and rise in volatility that has resulted is negative for the pure carry trades, but has also led to further widening in yield spreads in favour of the high yielders, and this is moderating the impact,” he said.

Indeed, the Australian and New Zealand dollars, where yields have risen most dramatically, both advanced against the yen, rising 0.4 per cent to Y101.93 and 0.3 per cent to Y90.99 respectively.

However, Hans Redeker at BNP Parisbas said if equity markets continued to push lower, yen selling pressure was unlikely to persist. “There comes a point when rising bond yields are negative for the carry theme,” he said. “This takes place when investors shift their focus from the positive growth story to that of inflation.”

 

[ford family]

The pound is weaker because the market expected the Bank of England to raise interest rates yesterday, and they didn't.

Forward rates show the pound stronger simply because they add the interest differential between UK and US rates to the current spot price. They are purely arithmetic and not a prediction.

ford family

 

[Scots Girl]

Hello

I was going to change money this weekend for my trip in september so should i wait for a few weeks? will the exchange rate go up again?

Thanks

 

[Netty]

Hello

I was going to change money this weekend for my trip in september so should i wait for a few weeks? will the exchange rate go up again?

Thanks

Its a guessing game, but i would change your money this weekend, you never know which way the rates will go.

http://www.comparetravelmoney.co.uk/

 

[oceanscape]

A lot of people were saying that they expect the $2:£1 offer back again at TC/Thomsons, so I would hold out, personally.

 

[paulh]

the markets tend to antisipate whats going to happen, the likelyhood of rates being increased yesterday was not expected so when news comes out it allready comfirms what they were expexting.Whilest rates look like they might go up, it might be 2 months before the next increase so £ dosent look as attractive, as outher curanceys give a better yeald.But when the thought in a couple of months rates might go up the£ will look beter so expect it to rise a little.Then again if china dumps any of the trillions of $ it holds on reserve who knows.Good job i bought some $ at thomas cook at the $2-£1 offer made me feel like a mini warren buffet
Paulh

 

[UKDEB]

Forward rates show the pound stronger simply because they add the interest differential between UK and US rates to the current spot price. They are purely arithmetic and not a prediction.

Precisely. The forward price is simply based on today's (spot) rate with an adjustment for the interest rate differential between the currencies. I deal with importers and exporters who routinely hedge against exchange rate fluctuations by buying currency forward. Whilst they understand the protection it provides them, most of them fail to grasp the pricing mechanism. Most people mistakenly believe forward prices to be a prediction of what rates will do. Currency (or any other commodity for that matter) speculators are simply gamblers. There's big money to be made. And lost. Of course economists and financial analysts will and do make predictions, but no-one knows when the next 911 or Iraq (or innumerable incalculable events) will skew forecasts. Buying forward removes doubt/risk, it doesn't guarantee that you will get the best rate.

 

[Pooster]

Me and DW are also going in September, i am looking to change £ to $ ASAP. even though the rate is dropping, it is still pretty good, and it only takes one bit of bad news for the bottom to fall out.

 

[wayneg]

Me and DW are also going in September, i am looking to change £ to $ ASAP. even though the rate is dropping, it is still pretty good, and it only takes one bit of bad news for the bottom to fall out.

It is a total gamble. If you exchange in somewhere like Thomas cook today you will get $1.87/£ which to me is not great because you will also lose 3 months interest on the money you exchange.
I think keeping your money in the bank and earning interest then use a Nationwide credit card (today exchanging at around $1.96) is a lot better way.
If the rate goes up even better. If it goes down it has to go down below $1.84 to be worse off taking into account lost interest (at a rate of 5%/year)

If one of the companies runs the $2/£1 offer again then that is probably best option just now but low rates like Post office are not a good option. IMHO.(I could be wrong, nobody knows)

 

[paulh]

would always go for what you think is best.As long as its above $1.65(rate we bought into dvc) its good enougth for me
Paulh

 

[tink too]

If you go into

www.crowncurrencyexchange.com you can see the way the rates are going up and down. It's showing $1.97 by September and $2.00 by next March.

But if you buy now, for March 2008, they are making interest on your money without even having to despatch your currency.

 

[mickg7dyd]

Hi,
At the time of this post the rate is $1.9703 so a slight improvement on earlier today.

Mick.

 

[wayneg]

Hi,
At the time of this post the rate is $1.9703 so a slight improvement on earlier today.

Mick.

Hope its bottomed then. I was just shocked to see a sudden drop after staying steady for a while.
I can sleep better now

 

[Scots Girl]

Thanks went out today and was offered everything from $1.82 - $1.91!!! I decided to wait till tomorrow and call the bank first thing as they offered me $1.99 on friday - how I wish i had taken it!!!

Thanks again

K x

 

[wayneg]

Very suprised a bank offering 2-3cents more than interbank rate. Do you think you misheard? should be more like 1.89 not 1.99 just now. maybe they made a mistake though.

 

[Scots Girl]

no defo told me $1.99 to the £ on Friday it was the RBS if its any less than $1.90 tomorrow i think i will just wait and see if it goes up. I'm gutted, i had the money there 2 weeks ago when all the offers were on but just didnt have the time to get to the travel agents!!!!!

Thanks again

 

[wayneg]

Like I keep saying dont worry too much about it, if you have the money invested earning 5%+ per year it could be just as good as these rates being offered now. Buy now and you lose your interest and can cancel out the few extra cents you are getting.