Will the Pound recover from its drop against the Euro?

Question

It is often said: "As with stocks and shares, so it is with currency exchange rates - they can go down as well as up".

I don't think this is true. The Pound has reduced significantly in value over the last fifty years.

Answer 1

If you look at the pound against the US dollar, you will see that it has dramatically increased in recent times. The decline in sterling is largely due to the effect of the US sub-prime leanding and it is seens that the Brit banks were more exposed than those on the mainland of Europe. When there was last discussion about Britain going into the Euro, we were about 1.50 and the rate to join the ERM was going to be about 1.36, which is where we were at Christmas. I personally think that some European banks are more exposed than they have been letting on and with a weaker pound helping export trade, this is now OK for the UK. Most of the worst effects of the disasterous landing in the US will be over by the end of 2009 and then we will see a stabilisation in the market. I think that although the banks will be borrowing at a cheap rate, mortgages will remain expensive, hovering around the 6.5% - 7%, as they attempt to recover. Rates and the housing market will be back on track by mid-2011 and you will probably see the pound trading at the more realistic level of between 1.32 and 1.37.

Answer 2

it's just another trick to make us join the euro the next thing you hear will be all the economic points have been met therefore we will join

Answer 3

Life imitates Football.