danieldwilliam: (electoral reform)
[personal profile] danieldwilliam
For those of you watching in black and white the pound is now at its lowest level against the US dollar in 31 years, trading this morning at $1.2757.

That's below the value it touched just after the EU Referendum result.

This isn't a result of Brexit. This is a result of us *talking* about Brexit. My guess, for what its worth, is that if we ever get round to actual Brexit we'll see the pound worth more or less one US dollar. Its high over the last twelve months was 1.55. Dollar parity would see the pound worth 2/3rds of its value a year ago.

You'll start to see this in inflation figures over the next few months. The next Bank of England quarterly inflation report is due on the 3rd of November and this will be the first one where the whole period is after the referendum and the fall in value of the pound. Anything that is imported, anything where large parts of the components are traded in dollars and anything involving lots of oil will get more expensive.

The FTSE 100 share index, made up of large multi-national firms, so not really a great measure of the UK economy, rises to a near record 7,000 points. It is traded in pounds. In dollars, it's down 2% this year. Basically people with dollars are taking their valuable dollars and buying cheap pounds to buy shares in FTSE 100 companies at a bargain. Apply the same logic to other UK stock indices.

If you are able to negotiate yourself a payrise now might be the time to start. Or if you're a pensioner with a triple locked pension and investments in the FTSE 100 sit back and crack open a bottle of English sparkling wine.

Date: 2016-10-04 09:26 am (UTC)
From: [identity profile] zenicurean.livejournal.com
Spirits are a bit low up in my corner of the world.

Right after the referendum result, Danske Bank suggested that Brexit might dip Finland and Denmark right back (https://www.ft.com/content/89e8baae-0ea6-3f90-a593-d5c882f32c01) into recession. There's also been talk about Denmark and Sweden losing their (modest) equivalents (http://www.bloomberg.com/news/articles/2016-09-20/brexit-fallout-could-end-rebates-for-all-eu-states-denmark-says) of Britain's EU rebate, as that system becomes less politically sustainable, and this is clearly causing worry in Stockholm and Copenhagen. Furthermore, all these countries are losing a key EU ally. The absence of British input on regulation and trade will affect them negatively. Even Norway, happily outside the EU but intrinsically linked to its fortunes, will lose out.

Obviously no one in Essex or Norfolk went to the polls with some sort of insidious plan to sabotage Denmark in mind. ("That that, Legos!") But it's nonetheless frustrating to see the market fallout from this building up: If Britain defaults to WTO rules, the indirect negative effects of Brexit in my region will be greater. So on balance we would like to keep Britain in the Common Market rules. But on the other hand, Britain can't be allowed to eat its cake and have it, too, and any Brexit deal will have to reflect that.
Edited Date: 2016-10-04 09:27 am (UTC)

Date: 2016-10-04 11:19 am (UTC)
From: [identity profile] rhythmaning.livejournal.com
I think you'll find that UberBrexiteer Boris has promised us that we CAN have our cake and eat it. He repeated this promise from the Leave campaign in an interview at the weekend.

And when Boris makes a promise, we know he can be relied on.

(And since I don't know you, can I just say this comment is sadly satirical. And my heartfelt apologies for my idiot countrymen trying to screw up the EU!)

Date: 2016-10-04 12:34 pm (UTC)
From: [identity profile] momentsmusicaux.livejournal.com
Americans use 'Legos' as a plural, Brits use it as a non-count noun :)

Date: 2016-10-04 11:41 am (UTC)
From: [identity profile] danieldwilliam.livejournal.com
Is that because you are already exposed to the UK economy by virtue of living here?
Edited Date: 2016-10-04 11:41 am (UTC)

Date: 2016-10-04 11:58 am (UTC)
andrewducker: (Illuminati)
From: [personal profile] andrewducker
More that I looked at the UK and the rest of the world, and decided that The Rest Of The World was a better bet for the next decade or two.

Date: 2016-10-04 11:13 am (UTC)
From: [identity profile] rhythmaning.livejournal.com
Regarding FTSE shares, as well as dollar-buying, a lot of FTSE100 companies have foreign earnings, translated into sterling for reporting. So their incomes have just gone up, which makes them cheap when measured on P:E.

Date: 2016-10-04 11:14 am (UTC)
From: [identity profile] rhythmaning.livejournal.com
Also... DOLLAR PARTY!

Because we can't afford one in pound land...

Date: 2016-10-04 11:39 am (UTC)
From: [identity profile] widgetfox.livejournal.com

I do not think that I would take the moral high ground on spellcheck errors if I were you.

Date: 2016-10-04 12:28 pm (UTC)
From: [identity profile] rhythmaning.livejournal.com
I wasn't knocking it! I think it's a great idea!

Date: 2016-10-04 12:31 pm (UTC)
From: [identity profile] momentsmusicaux.livejournal.com
I've been wondering why it was that the FTSE was up so much. Thanks for the explanation!

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