Pound Sinks as UK Economic Uncertainty Rises

GETTY IMAGES
BBC: The pound fell against the dollar on Friday as new figures showed a gloomy picture for the UK economy.

Sterling slipped to $1.11, after rallying on Thursday as Prime Minister Liz Truss resigned.

It came as official figures showed government borrowing rose to its second highest September on record.

Meanwhile, people are shopping less than they did before the coronavirus pandemic, according to figures from the Office For National Statistics (ONS).

Retail sales fell by more than expected last month, dropping 1.4% and continuing their slide from August, the official figures showed.

The pound's latest slide comes after a period of volatile trading for the currency. » | Noor Nanji, Business reporter, BBC News | Friday, October 21, 2022

The pound sterling used to be held in high regard all over the world. Unfortunately, its value has gone down and down and down. This is known as managed decline. At the rate things are going for the UK economy, the pound sterling will be little better than junk currency! (Though it hurts me to say so.)

We should have dumped the pound years ago and joined the euro.

For your information, just by way of example, in 1963, the pound was worth more than twelve Swiss francs! 12,2443 to be precise. Today, as I write this, one Swiss franc (CHF) is worth £1.12. In 1963, one pound sterling was worth US$ 2.8. Today, one pound sterling is worth US$1.12. Exactly the same as the Swiss franc.

(Sources: XE.com and PACIFIC Exchange Rate Service)

Emergency Action by Bank of England amid UK Economic Turmoil

As the economic storm clouds over the UK darkened further still, the Bank of England today staged a dramatic intervention - saying it will start buying up government debt in an effort to stabilise markets and protect pension funds.

The surging cost of borrowing, sparked last week by the Chancellor's tax-cutting plans, had earlier drawn a stinging rebuke from the IMF - but the government says it's sticking to its guns, although departments will be asked to identify 'spending efficiencies'.

Labour says parliament should be recalled so the prime minister is held to account over the crisis.


Truss and Kwarteng are not fit for purpose. They need to go. Go before the UK economy is totally ruined. Both of them are greenhorns. No to tax cuts for the super-rich! No to Kwarteng’s voodoo economics! – © Mark Alexander

Pound Hits Fresh 37-year Low after Mini-budget Rocks Markets

THE GUARDIAN: Odds of sterling hitting parity with dollar jump, as analysts say UK bond market ‘getting smoked’ by giveaway

A protester outside the Houses of Parliament as the chancellor, Kwasi Kwarteng, unveiled his mini budget on Friday. Photograph: Amer Ghazzal/REX/Shutterstock
The pound has hit a new 37-year low after the bonanza of tax cuts and spending measures in Kwasi Kwarteng’s mini-budget threatened to undermine confidence in the UK.

Sterling fell to $1.077 in early trading when Asia-Pacific markets opened after the weekend, closer to parity with the US dollar.

Chris Weston, the head of research at the brokerage firm Pepperstone, said the pound was “the whipping boy” of the G10 foreign exchange market, while the UK bond market was “getting smoked” thanks to Kwarteng’s £45bn debt-financed tax-cutting package.

“The funding requirement needed to pay for the mini-budget means either we need to see far better growth or higher bond yields to incentive capital inflows,” Weston said. Targets that the pound could fall below $1.05, for the first time ever, were being “liberally thrown around”, he added. » | Graeme Wearden | Sunday, September 25, 2022

Ha! Ha! Ha!. I could say: I told you so! We deserve all the pain we get! No! I am not being unpatriotic; on the contrary, I am being extremely patriotic. The dimwits of this country need to be brought to their senses asap.

This country is a medium-ranking European nation. Britannia no longer rules the waves. And probably never will again. Are we important as a nation? Of course we are! But we are no longer an imperial power; our Empire is gone, never to be resurrected. Get over it! These days, we need Europe; and Europe needs us.

People like Nigel Farage are not patriotic; au contraire, they are unpatriotic troublemakers. In fact, where is Nigel Farage when you need him most. He belongs in the stocks! He has caused so many Brits so much unnecessary pain with his vacuous talk. He shouldn't be allowed to get away with it.

This country belongs in the European Union. The absurd policy of Brexit needs to be reversed forthwith. – © Mark Alexander

Pound Plummets as UK Government Announces Biggest Tax Cuts in 50 Years

Don't call it a budget - but it is the biggest budget intervention we've seen in decades, largely at odds with what twelve years of Conservative Chancellors have told us.

The Office of Budget Responsibility was stopped from publishing forecasts it had been working on, so the test of whether it is responsible was largely left to the financial markets.

The Chancellor claims he's unleashing "the power of the private sector".

Pound Crashes as Markets Lose Confidence in Government

A screenshot taken from the accomanying video.
THE GUARDIAN: This is turning into an absolute rout on the pound, as the markets give a scathing verdict to Kwasi Kwarteng’s unfunded tax cuts and extra spending.

Having dropped through $1.10 earlier this afternoon, sterling has continued to crash….. all the way down to a new 37-year low of $1.09.

The pound has lost 3.5 cents today, cratering by 3% – on track for its worst day since the market panic of March 2020 when the pandemic hit. With video » | Graeme Wearden | Friday, September 23, 2022

Kwasi, the quasi chancellor! Kwarteng’s economics is already being shown up for what it truly is: voodoo economics. – © Mark Alexander

Pound sinks as investors question huge tax cuts: The pound has fallen to a fresh 37-year low against the dollar as financial markets reacted to the biggest tax cutting moves in 50 years. »

Pound Falls as Weak Retail Sales Raise Fears UK Economy Is in Recession

THE GUARDIAN: Sterling drops by more than 1% against dollar to $1.1351, its lowest since 1985

The pound sank to a fresh 37-year low against the dollar on Friday after weaker than expected retail sales raised fears that the British economy is already in recession.

Sterling fell by more than 1% against the currency to $1.1351, its lowest since 1985, partly reflecting broader dollar strength as well as specific concerns about the outlook for Britain. The pound also hit a 17-month low against the euro, with €1 worth 87.66p.

It came as the latest official data showed cash-strapped consumers cut back on spending by more than expected in August, when retail sales volumes in Great Britain fell by 1.6%. Economists had predicted a more modest fall of 0.5%. » | Phillip Inman | Friday, September 16, 2022

The Brexit pound is looking pretty weak and pathetic, isn't it? Never mind! We've got our blue passports back now; so you'll be able to sleep better at night.

Brexit, of course, is not the cause of this recession, but it sure isn't helping any. Gee thanks, Farage! And all your stupid, selfish cohorts. But hey! You'll be sitting pretty even if so many Brits will have to starve and/or freeze to death this winter. In German, we would call the lot of you ein Lumpenpack! Go look it up, Nige (et al), it suits you dorks to a T. – © Mark Alexander

Pound Slides as Fears Mount for UK Economy

BBC: Worries over the prospects for the UK economy led the pound to slide 5% against the US dollar in August.

Sterling sank again on Thursday morning, dipping below $1.16 on the currency markets.

Analysts said the fall reflects the darkening outlook for the economy, with consumers and businesses facing rising prices and soaring energy bills.

The Bank of England has predicted the UK will fall into recession towards the end of this year.

The weak pound means Brits travelling overseas will find their spending money will not stretch as far.

"Our economic prospects are not looking particularly good compared to the rest of the world," said Laura Lambie, senior investment director at Investec.

Ms Lambie said that recession fears were weighing on markets, with the investment bank Goldman Sachs warning this week that the UK could remain in recession until 2024.

A recession is defined as the economy getting smaller for two consecutive three-month periods. » | Noor Nanji, Business reporter, BBC News | Thursday, September 1, 2022

Euro Nears Parity with Dollar as Pound Hits Two-year Low

THE GUARDIAN: Europe’s single currency battered by fears over gas supply from Russia and US interest rate rises

One euro coin placed on top of one dollar bills Photograph: Gerard Bottino/SOPA Images/REX/Shutterstock
The euro is on the brink of parity with the dollar as investors fear that an energy crisis will plunge the region’s economy into recession.

The single currency fell to just $1.0003 on Tuesday morning, pushed lower by worries that the scheduled shutdown of the Nord Stream 1 pipeline – which transports natural gas from Russia to Europe – for maintenance could be made permanent.

Russia’s invasion of Ukraine in late February has triggered fears over Europe’s energy supply and hurt the region’s economies, pushing the euro 12% lower against the US dollar so far this year.

The euro is also being hit by expectations of further aggressive interest rate rises by the US Federal Reserve, which are driving the dollar higher. » | Julia Kollewe and Graeme Wearden | Tuesday, July 12, 2022

Business Live: Euro falls to brink of parity with dollar over fears Russia will cut off gas supplies »

Weak Pound Puts the Squeeze on Holiday Spending

BBC: The pound's weakness against the dollar and the euro spells bad news for British holidaymakers this summer.

Fears over the UK economy are weighing on markets, causing sterling to sink below $1.20 on Tuesday, its lowest level since the start of the pandemic, before partly recovering on Wednesday.

Versus the euro, the pound is hovering near thirteen-month lows.

As a result many Brits traveling abroad in the next few weeks will find their spending money won't stretch as far.

"The pound remains a very vulnerable currency," said Jane Foley, head of foreign exchange strategy at the Dutch bank Rabobank.

"A lot of this is related to fears about growth," she continued, noting that political uncertainty and a potential trade conflict with the European Union were likely to add to investors' concerns about the UK's economic outlook. » | Noor Nanji, Business reporter, BBC News | Wednesday, June 15, 2022

Boris Johnson in Scotland as Pound Falls amid No Deal Brexit Fears

On a visit to Scotland, the Prime Minister insisted that he did not believe a no-deal scenario was the most likely option. Unlike the man he's put in charge of no deal planning, Michael Gove, who yesterday suggested that it was. And Scotland's First Minister Nicola Sturgeon, after meeting Mr Johnson today, said she thought he secretly wanted a no-deal Brexit after all.

George Osborne: Sharing the Pound with Scotland Is 'Not Going to Happen'

The Chancellor uses a speech in Edinburgh to say: "If Scotland walks away from the UK, it walks away from the pound"

Read the Telegraph article here | Ben Riley-Smith, Scottish Political Reporter | Thursday, February 13, 2014

Pound Forecast to Tumble on 'Insane' Spending Cuts
THE SUNDAY TELEGRAPH: Britain's spending cuts have been branded as "absolutely insane" by one of the world's leading currency traders, who expects the pound to tumble beyond the low it has set this year.

"I think what Britain is doing is absolutely insane" John Taylor, the founder of the $8bn FXConcepts fund, told The Sunday Telegraph. "The Conservatives will lose their stomach for this."

Reducing Britain's £156bn budget deficit is the cornerstone of the government's plan for restoring the economy's health. George Osborne, the Chancellor of the Exchequer, told Parliament last week that the £81bn in spending cuts would pull "Britain back from the brink."

Although Mr Osborne's plan has won support from many economists, there remains concern that it will damage a recovery that is already showing signs of faltering.

"The last retail sales numbers were pretty ugly and then we have to go through the VAT hit," said Mr Taylor, who at 67 is one of the oldest operators in the foreign-exchange markets. The pound will fall below 1.40, possibly this year, he expects. Sterling reached 1.43, its weakest against the dollar this year in May.

The Bank of England has publicly welcomed sterling's decline since the financial crisis erupted in 2008, but the central bank is not alone. Having already yanked hard on monetary and fiscal levers, an increasing number of governments are eyeing a weaker currency as a way of securing their share of an uneven global recovery. >>> Richard Blackden in New York | Sunday, October 24, 2010

Since when do currency traders understand economics? – © Mark

This comment also appears here

Pound Under Pressure as UK Faces Political Vacuum
THE TELEGRAPH: Sterling was under pressure on Tuesday morning as investors reacted to the news that Labour and the Liberal Democrats are now engaged in official talks over a possible coalition.

The pound continued a slide that started toward the end of trading on Monday after Gordon Brown's unexpected announcement that he will manage negotiations with the Lib Dems before standing aside as Labour leader.

Within minutes of currency traders arriving at the desks on Tuesday, the pound had given up another half a cent against the dollar to trade at around $1.4780. It remains above its recent low of $1.4476, helped by the overall lift given to markets by the half-trillion euro bail-out package negotiated in Brussels. >>> | Tuesday, May 11, 2010

THE TELEGRAPH: Prepare for the age of austerity: The aftermath of the election has left us with very little certainty, except the sure knowledge that cuts are coming fast. >>> Rosie Murray-West | Monday, May 10, 2010

Warning for Britain as Financial Chaos Spreads to Spain
THE TELEGRAPH: Spain's economy was thrown into chaos on Thursday when its credit rating was cut, sharpening fears that Britain may suffer a similar fate.

The turmoil came just a day after Greece’s rating was cut, increasing concerns of a Europe-wide financial crisis.

The euro fell sharply and the interest rates European governments pay to borrow money jumped after Standard and Poor’s, a credit ratings agency, downgraded Spain.

Last night the government in Madrid appealed for calm, promising an “austerity programme” to cut spending.

But economists fear that events in Spain show that financial “contagion” is spreading from Greece, as investors are scared off investing in any European country with significant government deficits. >>> James Kirkup and Christopher Hope | Thursday, April 29, 2010

Britain Risks Greek-style Crisis, Warns Vince Cable
THE TELEGRAPH: Britain risks sliding into a Greek-style fiscal crisis unless the next government takes drastic action to cut borrowing, warned Vince Cable, the Liberal Democrat finance spokesman.

Greece is currently in talks with the IMF and the European Union on getting a €45bn bail-out package to prevent a sovereign default, and a slashing of its debt to junk status has sent global financial markets into a tailspin.

"The Greek position is much more serious but is a salutary warning that unless the next government gets seriously to grips with the deficit problems, as we're determined to do, we could have a serious problem," Mr Cable told Reuters Insider television. >>> | Wednesday, April 28, 2010

Election Fever Not Helping The Pound

Sterling Looks Doomed

Pfund im Sinkflug: Treiben Spekulanten England in den Ruin?
20MINUTEN.ch: Zuerst wetteten die Zocker gegen den Euro. Nun gerät das britische Pfund unter Druck. Spekulanten glauben, dass die Regierung in London ihre Schulden bald nicht mehr unter Kontrolle hat. Londons Schuldenwirtschaft hat griechische Verhältnisse erreicht.

Mit einem müden Lächeln blickten die Briten in den vergangenen Monaten zum europäischen Festland herüber. Die griechische Schuldenwirtschaft ging London nichts an, denn die Briten waren 1999 der europäischen Währungsunion nicht beigetreten. Statt in Euro zahlt das Vereinigte Königreich weiterhin mit «Pound Sterling».

Nun gerät das Pfund jedoch stark unter Druck, denn die Spekulanten haben nach dem Euro die britische Währung ins Visier genommen. Die Zahl der Short-Positionen an der Terminbörse von Chicago, mit denen Händler auf ein sinkendes Pfund wetten, sind stark gestiegen. Kürzlich ist das britische Pfund gegenüber dem Dollar auf ein 10-Monatstief gefallen.

Die «Euro-Verwandten» leiden

Der Ökonom David Meier von der Bank Julius Bär begründet den Kurssturz so: «Die meisten europäischen Währungen, die dem Euro nahestehen, haben sich in den letzten zwei Monaten gegenüber dem Dollar abgeschwächt. So auch das britische Pfund, die norwegische Krone und der Schweizer Franken.» Grund dafür ist der Vertrauensverlust in den Euro, der wegen Griechenlands Schuldenwirtschaft in eine tiefe Krise gestürzt sei, so Meier, der täglich die Währungsentwicklungen analysiert.

Der jüngste Schwächeanfall von anfangs Woche erklärt der Ökonom mit der politischen Entwicklung. «Das hängt mit dem ungewissen Ausgang der britischen Unterhauswahlen zusammen. Umfragen zeigten, dass die konservative Partei wahrscheinlich keine absolute Mehrheit im Parlament holen wird», so Meier. Dies sei insofern von Bedeutung, da der Markt den Labour-Kräften nicht zutraue, die während der Wirtschaftskrise angehäuften Schulden zu reduzieren und die Ausgaben in den Griff zu bekommen.» Briten als Schuldenkönige >>> Von Sandro Spaeth | Donnerstag, 04. März 2010

Pound Slumps to Nine-month Low Over Fears of a Hung Parliament
MAIL ONLINE: The pound slumped to a nine-month low against the dollar today as fears over a hung Parliament sparked a sterling sell-off.

The currency fell sharply to as low as 1.478 against the dollar, as well as dropping below 1.10 against the euro.

Pressure on the pound comes as the Conservative lead against Labour in the polls narrows - threatening an indecisive General Election result at the same time markets want firm action to sort out the UK's dire public finances.

Mark O'Sullivan, director of dealing at foreign exchange firm Currencies Direct, said: 'Until the political situation in the UK becomes clearer, sterling will remain very, very vulnerable.'

The sudden drop from 1.52 to below 1.48 is the pound's biggest one-day fall since January last year, according to Chris Turner, head of FX Strategy at ING Commercial Banking.

He warned: 'While UK policymakers may have quietly welcomed the pound's recent weakness, they will not appreciate the kind of fast markets that can see a "sell UK" mentality developing.'

Sterling has lost nearly 10 cents against the dollar in little more than a week - hitting holidaymakers in the pocket, increasing pressure on petrol pump prices and adding to import costs for businesses. Read on and comment >>> | Monday, March 01, 2010

Pound May Fall Below Parity with Euro, Economists Warn
TIMES ONLINE: Economists have warned that the pound is on the brink of sinking below parity with the euro due to the Government’s unconvincing plans to tackle Britain’s £178 billion budget deficit.

Douglas McWilliams, the chief executive of the Centre for Economics and Business Research (cebr), said that the British economy was walking “five yards away from the edge of the cliff” and could be toppled by an “unexpected gust”.

The pound is trading at 1.10 against the euro after hitting a low of 1.02 a year ago. However, currency markets are reflecting the expectation of a win for the Conservatives in next year’s election, raising hopes of tougher action to tackle the deficit. Any signs of Labour closing the gap ahead of the election would result in the pound plunging, according to the cebr.

“If I had to bet, I would bet on the side of parity being broken,” said Mr McWilliams, adding that there was significant downside risk for the euro as a result of the divergent economic performances of countries such as Germany and Greece. >>> Nic Fildes | Monday, December 28, 2009

Sorry, Ma’am! It’s Time for Us to Accept the Euro
Successive governments, along with the Bank of England, have shown that they are quite incapeable of taking good care of our currency. They’re obviuosly unable to maintain its value. Now, it seems, that dear Merve doesn’t even hide the fact! He wants a weak currency in order to “rebalance the nation’s economy”. What the hell does “rebalance the nation’s economy” mean anyway? It means nothing! These people are just trying to baffle us! What a load of bulldust it is! If these people had balanced the nation’s economy in the first place, they wouldn’t have to try and rebalance it now!

And what’s all this nonsense about quantitative easing? That’s a euphemism for printing money. History tells us where that leads to! It leads to hyperinflation.

It seems to me that neither the government nor the Bank of England are serious about maintaining a stable and valuable pound. People at the top of the banking sector don’t need to care about the pound’s falling value. All they have to do is award themselves hefty bonuses to make up for the lost value of their savings and salaries. For less privileged folk, this is not, alas, a possibility. So, with the pound falling dramatically in value and interest rates remaining very low, and likely to do so for quite some time to come, the people who are becoming poorer and poorer are ordinary folk, i.e. people who do not work in banks! Therefore, perhaps sadly, it is time to get rid of the pound and place our currency into good, safe hands – into the hands of the European Central Bank (ECB).

I, for one, am looking forward to the day when we shall have a stable and desirable currency. The euro must surely be the currency of the future of all European nations. It must surely also be the currency for the future of the United Kingdom, too. So let’s adopt it before we’ll be forced to do so by circumstances beyond our control. By that time the pound sterling may have have become next to worthless. – © Mark

Sterling Slides After BoE Chief Mervyn King Backs a Weak Pound
THE TELEGRAPH: Sterling fell to its weakest against the euro in more than 5½ months, pressured after Bank of England Governor Mervyn King said a weak domestic currency was helping to rebalance the nation's economy.

The UK currency also hit a near 2½-month low versus the dollar, stung by Mr King's comment to a regional UK newspaper that sterling's fall "will be helpful" to rebalance the UK economy to one focused more on exports.

While the comments reiterated the central bank's long-held view on the currency and the economy, analysts said the market considered his remarks a good opportunity to wipe out sterling's gains made the previous day.

Sterling had rallied on Wednesday after minutes from the BoE's policy meeting earlier this month showed a unanimous vote not to extend quantitative easing in September.

Market participants said those gains had been overdone, and some analysts said that even though King's comments on Thursday did not offer new insight into the BoE's position on sterling, his statement helped to revive momentum to dump the pound.

"When the market's down on a currency, it will jump on anything that justifies selling it," said Stuart Bennett, currency strategist at Calyon in London.

"Sterling is certainly the whipping boy at the moment."

The euro climbed roughly 1.5pc on the day to 91.53p, its highest since early April. Daily trade volumes surged on the move, with the number of trades executed on the Reuters Dealing system hitting its highest in at least three months.

Thursday's move put the euro on course to posting its best daily performance against the pound since late April. >>> Reuters | Thursday, September 24, 2009

Bank Calls Unprecedented Meeting of Economists
THE TELEGRAPH: The Bank of England has summoned the City's leading economists to an unprecedented meeting in Threadneedle Street, as the pound plunges amid growing confusion over its radical Quantitative Easing (QE) policy.

The Bank will host a seminar of all London's major economists next Tuesday – the first time it has invited them in en masse in recent memory – in what has been construed as a sign that it fears market participants are starting to lose faith in its efforts to pump cash into the economy. The move has also sparked speculation that it is poised to announce a major change to the monetary policy framework, although insiders dismissed such suggestions.

It came after the minutes from the Bank's latest Monetary Policy Committee meeting revealed that the idea of cutting the interest rate banks are paid on the reserves they hold there was not discussed this month. The pound has lurched lower in recent weeks, thanks in part to speculation that the Bank will impose charges on banks for holding excessive amounts of cash in reserve at its vaults. Under QE, it is pumping £175bn into the economy, but much of this cash is sitting in banks' reserve accounts rather than being recycled and flowing around the broader economy.

The suspicion that the Bank will soon take action to mitigate this has pushed down market interest rates sharply and contributed to an almost 5pc fall in the pound against other leading currencies. It has caused gilt prices and short-term interest rates to fluctuate wildly in recent weeks. >>> Edmund Conway and Angela Monaghan | Wednesday, September 23, 2009

Quantitative easing >>>

It’s Time to Adopt the Euro >>> Mark Alexander | Saturday, September 19, 2009