GBP / USD exchange rate

[ItsMrAlex2u]

Evenin all

There was a thread on here a while ago about the USD rate and whether to exchange to USD then or wait a while. I work for RBS Treasury and I posted our UK economists view (not all his technical commentary, just his view) that it was likely that we would see a drift back down of the rate (it was around 1.85 at the time if i recall).
He got it wrong and the rate has been driven up to 1.9653 (thats the interbank mid price not the rate you will get at your local Thomas Cook !! They will run a spread of something like 1.85 - 2.05

Reading the daily data that pours out in droves from Reuters and Bloomberg there is a pretty wide opinion that there is no obvious reason why GBP is currently showing as being so strong at present. A lot of futures traders are seemingly placing far too much belief that the UK will hike our base rate at twice next year which is far from certain.

Any market has resistance levels which prices often get close to and then drop back from and if we can breach 1.98 it is quite possible we will be through the 2.00 mark but there is not much more top side there it would seem.

Basically the point of this thread is that if anyone is planning on going to the states next year then now is a pretty good time to be buying your USD. If you open a USD account with your bank you will get a much better rate than you will at any foreign excahnge till (you should get a rate around 1.91 for a small exchange to a currency account at todays prices).  (just make sure from your bank that you can actually pick up your USD from your USD account at the foreign excange till without converting back through GBP)

There are clearly no guarantees here but by the time the next WSOP comes round the RBS, and a lot of other economists view is that we will be back around 1.80

If we hit $2 then fill yer boots.

[neeko]

OK - i am going to throw my 2 cents at this.

(a quick caveat, i am totally unqualified to have an opinion ... however)

The US $ has certain challenges at the moment, their (short term) interest rates are heading lower rather than higher, overheating housing market, slowdown in the economy, gridlock in congress blocking fiscal growth or tax cuts. So no +ive impetus for the US$ to go higher.

The UK is going remarkably well, solid growth, continued migration into the country preventing labour markets tightening allowing continued above average growth. Boring fiscal and monetary policies, which bizarrely is a good thing.

However neither of these things really matter, the main drives of exchange rates over the next few months will be walls of cash. China has $1 trillion lying around, it cant actually sell any dollar assets it has got but it can reduce at the margin how many more it buys. The same is true of Petro dollars, about another trillion dollars is owned by the middle east looking for something to do with them, there are only so may F1 GP circuits that can be built in Dubai, and islands built  for England footballers to buy before they have more cash desperate for a home.

This will mean that dollar wont get brought and Euros and Sterling will benefit, this means that a £1=$2 cannot be far away. Which is rather depressing - why do i put so much effort into a $5 SNG when the buying is less than a cost of a pint.

This will make the buyin to the WSOP only £5k, which is not a lot when the average house price in the UK will have gone up that much in the last 4 months.

The good news is that holidays to the US are cheap - however at the moment i wont holiday there as i refuse to queue at US customs for 4 million years for the privilege of entering their country.

[kinboshi]

Now is also the least damaging time to lose $1,000 in cash games...relatively speaking.

 

[Gryff]

Economists by and large are incompetant.

I believe the dollar will continue to slide.

Don't want to write a 2000 word report on it for you but the dollar has consistently devalued over the last 30 years for very good reasons and no reason why will it stop, only reasons why it will devalue further.

[ItsMrAlex2u]

Interesting arguments for sure.
I dont pretend to be an expert, I am just passing on the general market opinion. Of course there will be opposit opinions otherwise we wouldnt be where we are now.

The point is a 15 cent rise in a month or so is huge in any circumstances, and there is simply no justification for it. Things now arent any different than they were a month ago.

The case for GBP continuing to rise is based heavily on the UK rasing our base rate in 2007. A lot of people arent convinced it will happen.
I am not saying we are at the top of the market, but all I know is that in the next few days, unless something changes, I will be buying some USD for next year. Any time you can get the best part of 2 to 1 cant be bad.

Its only obviously massively relevant if you have big sums to exchange (which I dont, I hasten to add), but its nice to feel you have got good value for your £ what ever the sum !!

[boldie]

Economists by and large are incompetant.

I believe the dollar will continue to slide.

Don't want to write a 2000 word report on it for you but the dollar has consistently devalued over the last 30 years for very good reasons and no reason why will it stop, only reasons why it will devalue further.

lol...I studied international Economic Relations and geopolitics (yes it is as boring as it sounds) and I agree. Economists tend to have no idea about the real world. It's a very abstract way of thinking most of them adhere to. Let's just say I still think an economist is just about the worst person to run a countries Ministry of Economics...that's why they seem to be incompetent...because you can't use them in real life.

And indeed the dollar will continue to slide for a long time..simply because countries are using euro nominated accounts more and more and this spells trouble for the dollar.

[Acidmouse]

On the news they said it was becasue of the weak housing markets in USA that has lead to the weak $

[M3boy]

This is of great interest to me as well.

I have one client in particular who has in excess of $500,000 in the bank - bearing no interest (although I am working on this). So far this financial year, £11,000 has been lost due to currency exchange rate.

[boldie]

This is of great interest to me as well.

I have one client in particular who has in excess of $500,000 in the bank - bearing no interest (although I am working on this). So far this financial year, £11,000 has been lost due to currency exchange rate.

I don't understand why people who don't trade a lot in dollars would have dollar nominated accounts. Surely a euro nominated account is preferable?

[SupaMonkey]

Put briefly, the american economy is fcked.

The reason (briefly, use google if you want more detail) is largely because of oil. The level of personal debt in america is the highest in the world and to keep up the yanks have just been printing off more dollars. While this would tend to devalue most currencies, the value of the dollar has been kept high because it is only possible to buy oil in us dollars (at either the london or new york exchanges). This means that there is a demand for us dollars (keeping its value high) and lets face it, there isn't nearly anough gold in fort knox (or wherever) to back up the amount of paper going around. However a few things happened this year, Iran said that they were going to start an oil bourse (exchange) that sold oil in euros and the chinese said they were interested. This would lead to the chinese dumping their us dollars and buying euros. The bourse was supposed to start earlier this year but i don't know what has happened. Also, the yanks stopped publishing their M3 data. This bascially tells people how many dollars are kept by other countries for imports/exports (oil is the largest traded commoditiy). Why would they do that, well a reasonable guess is because they are expecting everyone to dump their dollars if they can buy oil in euros. So the demand for us dollars goes down and their currency loses value. The only good thing going for the us dollar is that it is the global currency.

Interestingly around the same time saddam was implmenting his oil for food programme, he was also trying to shift oil in euros. This didn't really take off for various reasons that i can't remember now but fuels the war for oil argument (i believe a lot of american oil companies have been contracted to replace pipes, pump oil etc. in iraq).

[M3boy]

Boldie, they have a euro a/c as well.

They are paid in various currencies, and was decided to have bank a/c's in the said currencies.

When I said £11k wiped of the value, thats not strictly correct as there is no need to exchange the $'s into £'s - no actual money is lost,,,, yet

[boldie]

Put briefly, the american economy is fcked.

The reason (briefly, use google if you want more detail) is largely because of oil. The level of personal debt in america is the highest in the world and to keep up the yanks have just been printing off more dollars. While this would tend to devalue most currencies, the value of the dollar has been kept high because it is only possible to buy oil in us dollars (at either the london or new york exchanges). This means that there is a demand for us dollars (keeping its value high) and lets face it, there isn't nearly anough gold in fort knox (or wherever) to back up the amount of paper going around. However a few things happened this year, Iran said that they were going to start an oil bourse (exchange) that sold oil in euros and the chinese said they were interested. This would lead to the chinese dumping their us dollars and buying euros. The bourse was supposed to start earlier this year but i don't know what has happened. Also, the yanks stopped publishing their M3 data. This bascially tells people how many dollars are kept by other countries for imports/exports (oil is the largest traded commoditiy). Why would they do that, well a reasonable guess is because they are expecting everyone to dump their dollars if they can buy oil in euros. So the demand for us dollars goes down and their currency loses value. The only good thing going for the us dollar is that it is the global currency.

Interestingly around the same time saddam was implmenting his oil for food programme, he was also trying to shift oil in euros. This didn't really take off for various reasons that i can't remember now but fuels the war for oil argument (i believe a lot of american oil companies have been contracted to replace pipes, pump oil etc. in iraq).

exactly.

For anyone wanting an explanation of this and what's going on that doesn't bore the pants of you. try Robert newmans history of Oil (it was on more4 a while ago) it's online..through google video. free DL and all that. It's a history lesson brought as a stand up show but it has a very interesting part in it that will explain all this as well.

it actually went a bit further then Supa is pointing out. Iraq, actually traded their Oil in euro's. North Korea trades everything in Euiro's now. Iran will also start trading in Euro's and right before the invasion of Iraq. Hugo Chavez (president of Venezuela and hated by America) was president of OPEC and had called a meeting and on the agenda (amongst other things) was a desicion to ONLY start trading oil in Euro's.

anyways...if you want a good laugh and pick something up a brief history of Oil is well worth watching.

[Foxy]

Dont believe a word Alex says he is a banker, He owns a 2.5 million house in Jersey from giving wrong information to the public about £ /$ rates. He is on the most wanted list in the UK and was last seen on a crimewatch episode selling dodgy £50 notes for £10

[ItsMrAlex2u]

Dont believe a word Alex says he is a banker, He owns a 2.5 million house in Jersey from giving wrong information to the public about £ /$ rates. He is on the most wanted list in the UK and was last seen on a crimewatch episode selling dodgy £50 notes for £10

£20 to the likes of you !!!

And the house must be worth at least ten mill.....

[thetank]

Do you think we'll see a shift over the next two years of the main currency being used in internet poker rooms?

With the ban and the dollar pissing away value, it makes sense to me that we all start playing in Euros.

Or would this harm the poker economy too much, as Americans who choose to play despite the ban, are now driven off.