251–260 of 379 posts
Earlier quoted context omitted.
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.
The ECB and BoE are also raising their rates, and they have a consistent history of being lower than US rates...
Most people in the UK are on fixed rate mortgages, most of which are 2-3 year fixes. Those who brought a home during the pandemic or fixed at a low rate typically fixed at around 1-2%. I personally fixed for 2 years at a rate of 1.7% just over a year a go when I moved house. Next year I'm likely going to need to fix at 7%. This will take my monthly payments from around £1300 to around £2600. I budgeted very conservatively when taking out my mortgage (at least I thought I did) stress testing my current finances to a rate of 5% - which was actually above my lenders standard variable rate at the time. Obviously with energy bills and the cost of living crisis my previous assumptions were already wonky, but rates going up this fast was something I would have never of predicted. I believe this is actually the fastest rise in rates ever. I don't have time to save to pay down my mortgage loan so I guess now I'm screwed lol.
I'm reading online that I was stupid for buying a house in a bubble and that rates need to go up and house prices need to fall. I do understand this is my fault, but it sucks because I've also let my family down big time by deciding to buy a house. I'm not sure of the exact numbers, but I believe around 500,000 people are in a similar position to me.
"A dollar a pound". A few decades ago this was in the headlines on CNN if I remember correctly. But really, there is no real reason for the GBP to be worth more than the dollar in the last few decades. The UK is a bit of a **hole, except for London. Guess things finally coming into balance now.
I've never heard anybody who lives in the UK ever say something like this, so your comment is comical at best. I encourage you to visit more places! :)
Earlier quoted context omitted.
The ECB and BoE are also raising their rates, and they have a consistent history of being lower than US rates...
For the purposes of attracting capital, that consistent history hurts them, no? Investors want higher rates, not lower, in this case.
It's mostly the ECB and BoE - and local pension funds mandated by local governments - so foreign investors are irrelevant.
General investors usually prefer low rates because they want their asset prices to be inflated.
Earlier quoted context omitted.
I think the point is the UK entered the energy crisis in poor shape thanks to Brexit.
The UK is in much better shape than Hungary, Poland, Germany and Italy...
Despite relying on them being willing to sell us energy, as non-single-market countries have no guarantee of access?
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…
For the UK the consideration is that this basically happened as the Chancellor announced his intent to fund huge tax cuts for the wealthy by borrowing. You don't need a whole lot of specialist knowledge to figure out that means the government has to sell more bonds and isn't in a position to reject higher prices for those bonds, which puts a downward pressure on Sterling.
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…
If it's about the US dollar, what important US economic news landed early in the morning US time ? For the UK the consideration is that this basically happened as the Chancellor announced his intent to fund huge tax cuts for the wealthy by borrowing. You don't need a whole lot of specialist knowledge to figure out that means the government has to sell more bonds and isn't in a position to reject higher prices for tho…
Not lower? Or am I misreading it?
So the bigger news here imo is what's happening in the bond market. It's now expected that the BoE will increase rates above 6% by the middle of next year. Most people in the UK are on fixed rate mortgages, most of which are 2-3 year fixes. Those who brought a home during the pandemic or fixed at a low rate typically fixed at around 1-2%. I personally fixed for 2 years at a rate of 1.7% just over a year a go when I m…
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…
If it's about the US dollar, what important US economic news landed early in the morning US time ? For the UK the consideration is that this basically happened as the Chancellor announced his intent to fund huge tax cuts for the wealthy by borrowing. You don't need a whole lot of specialist knowledge to figure out that means the government has to sell more bonds and isn't in a position to reject higher prices for tho…
Not necessarily saying I agree, but useful to have an alternative perspective