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Sterling drops below 1.5 USD


HeartThais

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Holiday goers in 2009?

 

Yes sure:

 

- First you have the buying power shrinking and it might reach a point when there is not even money left to travel.

 

- Cost of air tickets, still high and if the oil goes up again then bye to cheap air tickets to far away destinations.

 

- For many countries: Local currency is going down against "exotic destinations" currencies

 

Strange fate is, the USD is currently "strong" (at a huge price for the USA though) but there are more and more economical problems in the US and jobless people.

 

Sad for the £ but UK is currently in a deep crisis.

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Heard an expert on Bloomberg predict parity for the £ against the $ and euro ( ie. £1=$1 ) :sad: before too long....I made a rough calculation that I would need an x-rate of 60 Bt.to come back for another stint in LOS .....looks like I`ll be staying at home for a while.... :thumbdown:

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Unfortunately, I don't see much upside to sterling. I don't understand why baht isn't weakening more against USD. I really expected baht to weaken as investors repatriate into dollar assets. It would seem that BOT's efforts to stabilize baht in recent years by restricting inflows has had the desired effect. That said, it looks like BOT will be willing to let baht depreciate naturally and I think we should see some measured depreciation vs. USD.

 

http://thainews.prd.go.th/newsenglish/previewnews.php?news_id=255110200041

 

However, I really think the outlook for sterling is grim. UK consumers are overextended, even compared to Americans. UK housing market is in freefall. At the end of this holiday retail season, I think the UK will post some of the worst results in the world.

 

I had some hopes that the US would announce a suprise 75 bp cut in December for a slight glimmer of hope for a sterling bounce. But then I came across this article in the economist.

 

http://www.economist.com/finance/displaystory.cfm?story_id=12607243

 

The article reports that even though the fed funds rate is at 1%, the effective rate is only 25bp! A rate cut in December will have little impact on dollar weakening. In fact, if the effective rate gap closes, the dollar will appreciate.

 

Based on all this, I will be moving GBP into USD this week so that I can salvage something of my planned trip to LOS next year.

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