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British pound hits record low against the dollar

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Re: British pound hits record low against the dollar

#221

Post by hesk »

photochemsyn wrote: post #210

It's worth noting that there was an apparent real opportunity to resolve the Russia-Ukraine conflict in April 2022, via diplomatic negotiations, but UK's Boris Johnson reportedly disrupted those talks by threatening to withdraw UK/US support for Zelensky if he proceeded with negotiations. If the war had been resolved and sanctions on Russian export of gas to Europe had been lifted, this would have lowered gas prices…

> It's worth noting that there was an apparent real opportunity to resolve the Russia-Ukraine conflict in April 2022, via diplomatic negotiations, but UK's Boris Johnson reportedly disrupted those talks by threatening to withdraw UK/US support for Zelensky if he proceeded with negotiations.

Do you have a source for this claim? I heard this argument before from an acquaintance and it completely contradicts my reading of the situation in April.

Re: British pound hits record low against the dollar

#222

Post by pjc50 »

photochemsyn wrote: post #210

It's worth noting that there was an apparent real opportunity to resolve the Russia-Ukraine conflict in April 2022, via diplomatic negotiations, but UK's Boris Johnson reportedly disrupted those talks by threatening to withdraw UK/US support for Zelensky if he proceeded with negotiations. If the war had been resolved and sanctions on Russian export of gas to Europe had been lifted, this would have lowered gas prices…

> UK's Boris Johnson reportedly disrupted those talks by threatening to withdraw UK/US support for Zelensky if he proceeded with negotiations

I would like some evidence for this, especially the idea that Johnson could dictate US foreign policy.

Re: British pound hits record low against the dollar

#223

Post by outside1234 »

rossdavidh wrote: post #209

I'm not sure it's so much a story of the British pound, as of the US dollar, given that the pound-euro exchange rate is still well within it's range for the last 5 years: https://www.xe.com/currencycharts/?from=EUR&to=GBP&view=5Y The Chinese yuan and Japanease yen are also both at their lowest value vs the dollar in recent years, and moving faster than they normally do. For each of these (UK, EU, China, Japan) there…

It's because the US is raising interest rates to combat inflation. This is attracting capital as it seeks higher rates, and pushing down the exchange rates with USD across the board.

Re: British pound hits record low against the dollar

#224

Post by bananapear »

rossdavidh wrote: post #209

I'm not sure it's so much a story of the British pound, as of the US dollar, given that the pound-euro exchange rate is still well within it's range for the last 5 years: https://www.xe.com/currencycharts/?from=EUR&to=GBP&view=5Y The Chinese yuan and Japanease yen are also both at their lowest value vs the dollar in recent years, and moving faster than they normally do. For each of these (UK, EU, China, Japan) there…

USD tends to strengthen in a crisis as it tends to be considered to be the most stable currency

Re: British pound hits record low against the dollar

#225

Post by matthews2 »

ctrlmeta wrote: post #213
ndsipa_pomu wrote: post #203

Not really surprising that there's a lack of confidence in the untested combination of reducing tax (for high earners) and increasing borrowing. At first glance, that would seem to be a recipe for high inflation.

It does seem like a recipe for high inflation. But I want to understand why they chose this combination? Why play such a big gamble? There has to be some logic behind making this choice. But what is it? Were there other safer alternatives that they could have gone with? What could be the reasons for choosing this combination over those safer alternatives?

> What could be the reasons for choosing this combination over those safer alternatives?

Corruption.

Re: British pound hits record low against the dollar

#226

Post by jihadjihad »

There are obviously many things happening simultaneously in the international economy that can contribute to this, but this is in line with what you'd expect from an international economics perspective. When the interest paid on a currency's deposits increases (e.g. interest rates in the US rise), that country's currency will appreciate against foreign currencies (GBP, EUR, CHF, etc.). Similarly it will depreciate if interest rates fall (demand for dollars falls if the return on dollars is falling).

Re: British pound hits record low against the dollar

#227

Post by kasey_junk »

rossdavidh wrote: post #209

I'm not sure it's so much a story of the British pound, as of the US dollar, given that the pound-euro exchange rate is still well within it's range for the last 5 years: https://www.xe.com/currencycharts/?from=EUR&to=GBP&view=5Y The Chinese yuan and Japanease yen are also both at their lowest value vs the dollar in recent years, and moving faster than they normally do. For each of these (UK, EU, China, Japan) there…

China specifically also directly sets the rate bands that are allowed.

They’ve specifically weakened their currency to juice their economy (and they are lowering rates).

Re: British pound hits record low against the dollar

#228

Post by ndsipa_pomu »

ctrlmeta wrote: post #213
ndsipa_pomu wrote: post #203

Not really surprising that there's a lack of confidence in the untested combination of reducing tax (for high earners) and increasing borrowing. At first glance, that would seem to be a recipe for high inflation.

It does seem like a recipe for high inflation. But I want to understand why they chose this combination? Why play such a big gamble? There has to be some logic behind making this choice. But what is it? Were there other safer alternatives that they could have gone with? What could be the reasons for choosing this combination over those safer alternatives?

Almost anything else would have been safer.

I've heard rumours about Kwarteng being involved with Hedge Funds that have now made a fortune by shorting the pound and to be honest, that makes more sense than any other explanation.

Re: British pound hits record low against the dollar

#229

Post by pjc50 »

ctrlmeta wrote: post #213
ndsipa_pomu wrote: post #203

Not really surprising that there's a lack of confidence in the untested combination of reducing tax (for high earners) and increasing borrowing. At first glance, that would seem to be a recipe for high inflation.

It does seem like a recipe for high inflation. But I want to understand why they chose this combination? Why play such a big gamble? There has to be some logic behind making this choice. But what is it? Were there other safer alternatives that they could have gone with? What could be the reasons for choosing this combination over those safer alternatives?

The logic seems to be that they wanted the financial benefits of reducing their tax bills, and those of their backers, and didn't care about any of the other consequenses.

(There was some stated nonsense about reducing tax bills increasing growth, but trickle-down economics has never been proven to work and they weren't interested in that)

Re: British pound hits record low against the dollar

#230

Post by dinopete »

ctrlmeta wrote: post #213
ndsipa_pomu wrote: post #203

Not really surprising that there's a lack of confidence in the untested combination of reducing tax (for high earners) and increasing borrowing. At first glance, that would seem to be a recipe for high inflation.

It does seem like a recipe for high inflation. But I want to understand why they chose this combination? Why play such a big gamble? There has to be some logic behind making this choice. But what is it? Were there other safer alternatives that they could have gone with? What could be the reasons for choosing this combination over those safer alternatives?

The logic is nothing to do with inflation and more about putting cash in the pockets of themselves and their donors.
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