£ Vs $

Desert Orchid

Desert Orchid

Senior Jockey
Joined
Aug 2, 2005
Messages
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I am booked up to go to USA this summer.

Today, someone told me they reckoned the dollar would rise about 25c compared to the pound between now and July.

Does anyone have any ideas if that's likely?
 
I'd hate to mislead you DO, but I think that is unlikely. Look at the possible interest rate and balance of trade movements.The chairman of the Fed indicated on Weds that further $ interest rate cuts are likely. This will cause some selling of the dollar and migration to higher interest rate currencies such as sterling. The Chairman of the BOE indicated this week that he was happy at 5.5% as fears of inflation were latent in sterling. I think this makes £ a more attractive hedge.

USA is technically facing recession which will further negate the strength of the currency. (See DOW and NASDAQ indices for the last 60 days.) On balance, I wouldn't currently favour a punt on the $.

Having said that I thought Ballytrim would win the Champion Bumper.
 
People on here who know a lot more than me, but the futures markets don't appear to point to any great shift.
 
The US has been running a record deficit in order to finance its military misadventures at the same time as interest rates worldwide have been rising.

Will oil revenues from Iraq, against which the costs of the war have been mortgaged, come on stream in time to make a difference? I don't know. Either things are now a bit quieter in Iraq or the media have tired of reporting the disturbances. Even so, it's hard to imagine the bonanza the Bush people were hoping for.

It therefore seems that just like Clinton the last time, the first job of a newly elected Democrat president will be to sort out the federal budget.

Meanwhile the economic cycle in the UK is on a downward swing while the eurozone is on the way up. This might make sterling look weak at the moment, but not, I think, vis a vis the dollar.

By the way, I too backed Ballytrim ante post for that Cheltenham bumper.
 
Thanks, guys.

My reply at the time was that if there was any shift in favour of the dollar I couldn't see it being any more than a cent or two but what I know about currencies could be typed in size 20 font and stuck on the back of a dime.

The discussion arose because I said I didn't see the point of wading in now and buying currency for the holiday. I opined that as far as any 'serious' spending over there was concerned, I'd rather take my credit card and pay slightly over the odds on their exchange rate than worry about personal security when carrying a large amount. I thought of carrying a wad of one-dollar bills for tips here and there and then maybe a bit more in higher denominations for incidentals.

Can you tell it's eleven years since I was last over the pond?
 
I wouldn't rush to agree with AC.

I see a weak dollar, but also weak sterling. I don't think the exchange rate is likely to move very much in the next year or so.

The MPC are cutting rates in February, and I think that they will do so again in April; the housing market is very weak over there.

The reason the rate traded above 2 dollars was because there was an expectation that UK rates were high and staying that way. UK rates are falling, and have further to fall than dollar rates.

If a gun were put to my head, I would underweight GBP versus the dollar, but I think cable is going to stay around where it is.
 
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