Will the recent volitaility on Wall St. and in the FTSE have any effect on the exchange rate btwn the $ and £

Question

The Amrican Dollar has been taking a beating over the last year and a half in its value to the British Pound. What will all this volitaility mean in terms to the value relationship between these two currencies. Will the sinking European markets have a negative effect on the pound, or will this be offset by the plunging of the dollar as well?

What are your predictions in the upcoming months concerning the value relationship between the American greenback and the Pound Sterling?

Answer 1

The stupid thing about this is that the UK are still valuing the Pound alongside the Dollar. By doing so, everytime the US stock loses value, it has an impact on UK stock. The Dollar is at it's weakest for many years and although the US Government has pumped billions of reserves into the economy, it had little effect and only for a very short time. Therefore, the US economy is basically finished. US debt to the rest of the world is increasing at astronomical rates, due to the weak Dollar. Luckily, for the UK, our Pound still remains strong and our stock hasn't lost too much value. Our Government haven't had to pump any reserves into the economy. The same is applying all over the EU. The Euro is staying strong. I think more countries are going to opt out of using the $US for trading, as some already have. Maybe, the Pound and / or the Euro is / are going to dominate the world's trading currency in the near future. The US (Bush in particular) has destroyed itself through greed and too much political interference. Apart from Iraq and Afghanistan, Bush now has to justify his reasoning behind creating another "Cold War" with Russia. He had no good cause to put hundreds of US "Nuclear" Missiles on mainland Europe. This decision was a direct threat to Russia and Russia have retaliated. OK, so Russia may be small compared to the former Soviet era but Russia still has many large Allies and can still be a major threat to the stabilisation of the world's economies and peace. The sooner you get rid of Bush and reverse the decision to have another (costly) cold war, the sooner the US can try to become a strong economical player again, in the world's markets.

Answer 2

The Pound Sterling is slowly being squeezed by the Bank of England, lessening supply. This should continue to keep the Pound healthy and strong vs. the USD.

The Euro seems to be going the way of the Yen, increasing supply. But the U.S. no longer reports the status of it's money supply so the Euro and Yen crosses should react in accordance with Federal Reserve supply.

Answer 3

yes the US housing market is in decline - americans are not buying goods much - just scraping to pay mortgages - mortgage companies have put more squeeze on borrowing requirements

yes - if one part of the economy dries up then others are effected in varying degrees - the us invests big in the uk and they are big trading partners -

my predictions are that if the us dollar falls then so does the pound and the currencies of other close us trading partners

Answer 4

The "sinking European markets" you are mistaken. My predictions are we will see a rise in the price of oil followed by a mini recession and the dollar will rise .8% against the Japanese yen

Answer 5

Well yes.There will be a definite effect on the Greed and Grabbitt Index of Discombobulated Inhumanity.Doncha think?