Sterling to reach $2 as Fed plans new rate hike

Sunday Times
DAVID SMITH



STERLING is set to climb to $2 in the coming weeks as the dollar’s slide continues, analysts say.

The dollar sell-off, which intensified following George Bush’s victory in the US presidential election on Tuesday, has already pushed it down to a record low against the euro.

The dollar is set to remain under pressure in spite of a rise in American interest rates, to be announced this week. The Federal Reserve’s open market committee, which has already raised rates three times this year, will announce a hike from 1.75% to 2% on Wednesday. Following strong employment figures, dealers expect the Fed to signal that the “measured pace” of rate rises will continue.

The Bank of England will also provide guidance on its interest-rate strategy when the governor, Mervyn King, presents its quarterly inflation report. With rates at 4.75% and the housing market cooling rapidly, some analysts think the peak has already been reached and that the Bank will be announcing cuts next year.

More:
http://www.timesonline.co.uk/newspaper/0,,176-1347424,00.html

somebody tell me what this means please.

because everything will be so much more expensive with the terrible rate of exchange. Should the dollar continue to slide, it also means that imports from much of the world will be more expensive.

Except stuff from China. Since their currency is pegged to the dollar, it doesn't matter how low the dollar goes.

American stuff will be cheaper for overseas buyers, and the US will be a cheap haven for tourists.

We're becoming a banana republic with a worthless currency is what it means. But you knew that already.


jim

How many tourists will want to take that cheap trip to Florida or the Grand Canyon if it means traveling to a fascist rogue state? How many will buy cheap American products with the knowledge that it is indirectly putting money in the pocket of the US Government to fund what ever crazy "Faith-Based" foreign policy they come up with next?

Can't remember where or when, but it did stick in my mind, because if it's true Walton mart is going to be in trouble. Their cheap prices from china will be on the rise, which will drop their stock values. I hope, I hope, I hope.

We import British goods, and our business is going to plummet, or we're going to have to cut our margins in order to keep prices constant, or as close to constant as we can.

This has a detrimental impact on British exporters to the US and, obviously, to US importers of British goods. And, of course, to the US consumer.

Conversesly, I believe this is just dandy news to US exporters. Unfortunately, trade moves in all directions, and advantages to only one side of the equation will be hazardous in the long run.

Anyone surprised?

And, as one of the other posts observed, this is only the beginning.

I'm just guessing. However, I remember reading that the UK owns more of the US than any other country. A strong pound is going to hurt the return on their investment, but it will probably help them buy up more of the US if they were interested.

I personally think a $1.50 pound is absurdly expensive. If you look at British goods, the price in pounds always seems to me like a fair price to pay in dollars and cents. Our poor bastard fellow countrymen living over there on a dollar-based income are paying through the nose if they are living on the economy.

holy shit.

why am I not feeling much pity for my country right now..?

hmm..

Hyper inflation, pound at $2.50. And they said that the price of oil was irrelevant.

.. well, except to the NASCAR race in the next county. They don't give a shit how much the Euro or Pound cost US travelers.... "those jet-setters are just elite bastards, anyhow, ain't they JimBob?"

Mallwart will still sell the Redstaters all the nifty plastic Chinese crap they crave at low-low prices.

I wonder how much of a cheap tourist haven we'll become when our Middle Eastern buddies start blowing shit up in this country? (Anybody have any idea of why they haven't started already?)

What about the theory that oil is going to be traded in Euros soon.

We're on a fixed income pension... inflation will kill us. I'm not going peacefully or alone!