GBP / USD - 38 YEAR LOW - $1.08!!!

[mrka]

What are we to make of this? I am no economist, but I do business with Chinese factories who only accept USD. My buying power in May 2021 has gone from $1.43 to now $1.08 and most likely going to see the £ way below the $ at this rate!!!

Is there more to the surface here? Is this more a case of dollar strength than pound weakness? The DXY is pumping like crazy, and shows no signs of slowing! Where are we heading here and what can we make of all this?!

 

[japancool]

It's quite simple - markets have more confidence in the US economy than the British one. It's not hard to see why.

Unless Truss' gamble pays off, it's only going to get worse. We could see parity before long.

Oh well. Time to win the lottery.

 

[mrka]

It's quite simple - markets have more confidence in the US economy than the British one. It's not hard to see why.

Unless Truss' gamble pays off, it's only going to get worse. We could see parity before long.

Oh well. Time to win the lottery.

Can you elaborate on these 'markets'?

 

[japancool]

Can you elaborate on these 'markets'?

Anyone with a view to investing their money in the UK. Funds, investors, forex markets. Oh, and other governments.

 

[mrka]

No doubt the recent 'mini budget' has also killed off the £!!!!

 

[Red Wood]

It's almost hard to believe the ticket chart looking at GBP/USD, GBP/EUR not as bad, but still taking a hit.

70 odd % of our products settled in USD, so this will mean an immediate price increase for our customers.

It's beyond a joke now.

 

[MBE2017]

The UK has just had a huge fiscal stimulus over the last few years due to covid, then a huge money printing increase for huge fuel hikes, and now another huge tax giveaway.

You are wondering why the markets are marking the pound down?

Sooner or later some real pain is going to hit the economy, and put simply, despite the USA printing even more than us, the USA economy out performs us.

 

[Bob Morgan]

Wheelbarrow Futures!

 

[pentel]

The reduction in the value of the pound should result in an increasing amount of onshoring, bringing production back to the UK

 

[mrka]

The reduction in the value of the pound should result in an increasing amount of onshoring, bringing production back to the UK

So you mean cheaper labour, how does that help? The UK becoming China in the 1980s?
'Low skilled' low pay workers treated like dog meat on 0 hour contracts?

 

[MarkOnline]

So you mean cheaper labour, how does that help? The UK becoming China in the 1980s?
'Low skilled' low pay workers treated like dog meat on 0 hour contracts?

Or it could mean that we are priced more competitively in some international markets, thus providing long term well paid jobs for a more skilled labour force. Is it half full or half empty?

 

[mrka]

Or it could mean that we are priced more competitively in some international markets, thus providing long term well paid jobs for a more skilled labour force. Is it half full or half empty?

The only reason big business would come to the UK is to take advantage of a cheaper workforce, and with the way this government is acting it is clear it would not take much lobbying to keep that work force at below the minimum or living wage for many eons to come. Maybe the UK can become the new India of the world, with tens of thousands of call centres, maybe the people of Britain will have to learn Hindi and Mandarin and annoy those 1st world nationals with our terrible translations... Maybe this is the new British workforce you envision?

 

[pentel]

No doubt the recent 'mini budget' has also killed off the £!!!!

Has this affected your business at all?

 

[japancool]

Has this affected your business at all?

It affected mine. I'm an importer, and costs jumped by 3% between Thursday and Friday.

 

[MarkOnline]

The only reason big business would come to the UK is to take advantage of a cheaper workforce, and with the way this government is acting it is clear it would not take much lobbying to keep that work force at below the minimum or living wage for many eons to come. Maybe the UK can become the new India of the world, with tens of thousands of call centres, maybe the people of Britain will have to learn Hindi and Mandarin and annoy those 1st world nationals with our terrible translations... Maybe this is the new British workforce you envision?

Baring in mind this is a small business forum, I hadnt considered trying to attract multi £billion companies to this country. My thoughts were to smaller British companies who may now be able to compete more easily on the value of their brand and "Britishness". We have lost so much to overseas producers because we tried to compete with high volume tighter margin market segments.

We dont need to be the cheapest, we just need to be world beating in the middle to better end of the market. I would imagine that the better end Scotch Whiskey producers are jumping up and down at the even stronger returns they will achieve for their products in foreign markets. Keep multiplying the number of companies who seize opportunities in foreign markets and it can start to add up to significant numbers. Importers of foreign goods (price buyers) may find that UK suppliers now offer a viable alternative for certain products.

Its just my view, we need to produce real goods and sell them to real people both at home and abroad. Shuffling with the factors which influence asset prices doesnt create any real wealth. Who knows, maybe we could get to a point where companies could afford to pay "the working man" more money with the spoils of increased production and efficiency.

 

[MBE2017]

The only reason big business would come to the UK is to take advantage of a cheaper workforce,

Seriously, there are hundreds of reasons why companies like to use a UK workforce.

 

[mrka]

Seriously, there are hundreds of reasons why companies like to use a UK workforce.

Share some

 

[MBE2017]

Share some

Use your brain.

 

[mrka]

Use your brain.

Bottom line and cheap labour is by far the most important factor for any business.

 

[DontAsk]

My exports are so much more attractive to the US now.

 

[fisicx]

Bottom line and cheap labour is by far the most important factor for any business.

Do you really want some job centre rejects building medical equipment or repairing your car?

 

[Jasondb]

Can you elaborate on these 'markets'?

I guess they think Truss is not going to boost the economy yet shrink it.

 

[mrka]

Do you really want some job centre rejects building medical equipment or repairing your car?

I think it's relative. Those skilled persons who can design and manufacture medical equipment or repair modern day electric cars are now suddenly more accessible and affordable, sure, it might boost the jobs market and employment figures but I don't see how people will be any better off, as I can't see wages going up or cost of living coming down.

 

[WaveJumper]

The markets have reacted as they always do - to uncertainty, the markets are pretty good at seeing what way the wind is blowing or going to blow and generally will have reacted weeks if not months before an event happens. Markets and in this case we are talking the pound crashed on the sudden realisation Truss was going much further than was expected, I don't think anyone quite expected the mini budget details we got, and now the market makers are going to take a bit of time to digest how this is going to be paid for etc etc

By Monday there maybe be a more positive feeling in the markets but don't hold your breath

 

[fisicx]

I think it's relative. Those skilled persons who can design and manufacture medical equipment or repair modern day electric cars are now suddenly more accessible and affordable, sure, it might boost the jobs market and employment figures but I don't see how people will be any better off, as I can't see wages going up or cost of living coming down.

Wages are going up

 

[pentel]

I can't see wages going up

They will if you pay your staff more.

 

[HFE Signs]

I don't think the UK media do us any favors, they get a slight sniff of recession and its all doom and gloom. Listen to CNN and they are always talking their markets up and putting reason to the dips, essentially keeping investors confidence.

 

[WaveJumper]

Wages are going up

I don't think the UK media do us any favors, they get a slight sniff of recession and its all doom and gloom. Listen to CNN and they are always talking their markets up and putting reason to the dips, essentially keeping investors confidence.

When you look at the roots of these media companies and who actually owns them, if you were really cynical one might think they have a vested interest in giving the markets a positive spin

 

[pentel]

Share some

How about these for a start:

Common language
Same time zone
No Currency risk
Quick response for both samples and production
Less shipping time & cost
More responsive to issues
Easier to visit where your products are being made
No duty or freight forwarders to deal with
Usually easier to get credit account
Strong IP protection
More consistent product

 

[HFE Signs]

When you look at the roots of these media companies and who actually owns them, if you were really cynical one might think they have a vested interest in giving the markets a positive spin

Totally agree, they pump the negative news when the markets have closed - by the time they re-open people have forgot and it's all positive again!

 

[japancool]

How about these for a start:

Common language
Same time zone
No Currency risk
Quick response for both samples and production
Less shipping time & cost
More responsive to issues
Easier to visit where your products are being made
No duty or freight forwarders to deal with
Usually easier to get credit account
Strong IP protection
More consistent product

You forget one very important thing - rule of law. But it all depends where the company comes from in the first place. Common language doesn't apply to, Japanese companies, for example.

The thing is, Ireland has many of these advantages and also has a very low corporation tax.

 

[Bob Morgan]

For those interested, Australia's Central Bank went BUST on Wednesday!

 

[MarkOnline]

For those interested, Australia's Central Bank went BUST on Wednesday!

The interesting part of the article I read concerning this was.........."its equity(Australia Central Bank) had been wiped out by losses suffered on pandemic-era bond buying, but its ability to create money meant it was not insolvent and would continue as normal."

Who needs to absolve sin when you can create unlimited amounts of debt.

 

[Jeff FV]

The thing is, Ireland has many of these advantages and also has a very low corporation tax.

… and easy, unrestricted access to Europe …

 

[MBE2017]

You forget one very important thing - rule of law. But it all depends where the company comes from in the first place. Common language doesn't apply to, Japanese companies, for example.

The thing is, Ireland has many of these advantages and also has a very low corporation tax.

Main point being, we should appreciate that the UK has a huge appeal too many companies, many are the same reasons why so many choose to live here.

People should stop thinking the UK is finished and worthless, and start appreciating most people and countries would happily get our advantages. As a country, we face challenges, so what? Where doesn’t?

 

[The Byre]

I don't think the UK media do us any favors, they get a slight sniff of recession and its all doom and gloom.

They did the same with the C19 - thereby creating general hysteria and a two-year shutdown of business.

Listen to CNN and they are always talking their markets up and putting reason to the dips, essentially keeping investors confidence.

The pundits who appear on CNN and CNBC and all the other business channels, esp. the US channels all have a dog in the race. They are nearly always fund managers or financial advisers and they need to sell product. They need to get the "Buy the dip!" message out there if they are going to meet those all-important boat payments!

Their job is to manage your money - until it is all gone!

The last thing they want to happen is for people to get out of the market and stay out of the market until we get to 'The Valley of Despair' when people sell everything at rock-bottom prices. But that is where we are heading and it will be worldwide!

Right now, the only investment options that make sense are either precious metals or the dollar - though I would be somewhat careful with the dollar, as the shortage of dollar-denominated financial assets may soon end and it will start to sink.

As of today - here are the current exchange rates -

• Take a pound into an American bank and you will get - sympathy.
• Take a pound into a German bank and you will get - a good laugh!
• Take a pound into a British bank and you will get - to read a sign telling you that the branch has closed and that you should try their branch in another town.
• Take a pound into that British bank in a nearby town and you will get - in a very long queue.

Though rates may vary!

 

[LPB 123]

My exports are so much more attractive to the US now.

Is the cost to purchase your products going to go up due to the poor exchange rate though? Or are your products UK made with only UK materials?

 

[Red Wood]

Is the cost to purchase your products going to go up due to the poor exchange rate though? Or are your products UK made with only UK material

I'm almost certain whatever they make isn't produced with UK raw materials, unless of course it's some form of bakery..

The United Kingdom, the world's fifth-largest trading nation, is highly dependent on foreign trade. It must import almost all its copper, ferrous metals, lead, zinc, rubber, and raw cotton; most of its tin, raw wool, hides and skins, and many other raw materials; and about one-third of its food.

 

[WaveJumper]

GBP/USD since the lows of 103 has been trying to recover a little territory fighting hard this morning to get back over the 107 mark.

EUR/USD suffered a similar fate with lows just above the 95 to US again fighting back to get above the 97 mark this morning.

Generally markets across Asia suffered heavy selling overnight and with a lot of economic data out this week markets are pretty jittery to say the least, worth looking out for a lot of German retail and unemployment figures

 

[Fagin2021]

Well, it's a straightforward decision. I buy in dollars and need an exchange rate of US$1.25 to maintain a reasonable margin.

I can't sell at US$1.07 without a substantial price increase. However, my principal competitors are US companies selling online to the UK, who also buy in dollars.

I'm stuffed! My plan is to sell everything I own and spend the loot sitting on a beach on a tropical island, gorging on Big Macs and throwing the rubbish into the sea. Then, when the money runs out I shall return to the UK and become a vampire on the bosom of the state.

C'est la vie.