Pound hits $1.36 -because of Brexit?

Today the pound got back to $1.36, a fraction off the pre referendum low earlier in 2016.

This follows hints that the Bank might put interest rates back up to 0.5% where they were before the vote. Given the wish to blame everything on Brexit maybe we shoukd say thanks to Brexit the pound has soared in recent weeks.

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40 Comments

  1. Posted September 15, 2017 at 7:19 pm | Permalink

    Interest rates have been too low for far too long. We need base rates to rise but to get some real competition in banking to cut their excessive margins. They way to get the economy going is not so much low interest rates, but tax cuts, tax simplification, cuts in the bloated state sector, a bonfire of red tape, cheap non green crap energy, easy hire and fire, real competition in health care, broadcasting and education. Also cut out all the daft worthless degrees (at least half of them) and teach people some real & practical skills. Cut HS2, Hinkley C, the greencrap subsidies and other insanities.

    • Posted September 15, 2017 at 7:26 pm | Permalink

      If you have not transferred you D.B. pension yet then you might have now missed the best transfer values but perhaps not quite too late yet.

      • Posted September 16, 2017 at 7:24 am | Permalink

        LL, Lucky me, mines just been valued and looking good.

    • Posted September 16, 2017 at 12:04 am | Permalink

      Here I agree with LL, we are suffering from grossly inflated asset prices BECAUSE we have lowered the value of money, ie interest rates. Asset prices will fall dramatically (and probably a recession) if interest rates are raised. However, our host is being a tad disingenuous by selecting the cable rate, look at the =GBP index and you will find that sterling is just bouncing off the lows. But take every positive you can!

    • Posted September 16, 2017 at 7:54 am | Permalink

      LL

      Absolutely right on all counts!! But surely this would be far too sensible an option for any of our wasteful governments to implement??

    • Posted September 16, 2017 at 11:44 am | Permalink

      Totally agree

  2. Posted September 15, 2017 at 7:32 pm | Permalink

    The telling word here is ‘might’.

    Hopefully that might will turn into a ‘has’.

  3. Posted September 15, 2017 at 7:47 pm | Permalink

    I have been watching this on BBC world service. I didn’t realise there were so many indexes But climb rapidly :it has.

  4. Posted September 15, 2017 at 8:06 pm | Permalink

    Shall we place a bet on the BBC saying that the down turn on FTSE is due to Brexit. No doubt investment managers are switching back from Sterling to Dollar on equities.

    The huge rise in FTSE driven by the drop in Sterling after the vote gave a very good return on pension funds, losts seeing a 20-22% rise on average risk funds.

    How long before they start complaining about the cost of holidays there as a result like Sky were.

  5. Posted September 15, 2017 at 8:21 pm | Permalink

    It won’t matter if the public get hit with self inflicted inflation because of a food (fat) tax. The plans to reduce portions by 10% will not be met by a 10% reduction in price. This is a tax by stealth.

    If not then it’s incitement of hatred towards fat people. Yet again people who have done nothing wrong are being punished because of a minority who can’t control themselves and there will be much resentment.

  6. Posted September 15, 2017 at 8:58 pm | Permalink

    No, keep with the script.
    If you mention this at all, it’s
    1 after a long period of Sterling weakness due to Brexit
    2 going to send the economy into a tailspin, reduce house prices and lead to a mountain of negative equity
    3 is weakness in the dollar due to Trump rather than Sterling strength.

    • Posted September 15, 2017 at 9:01 pm | Permalink

      Oh, and don’t forget the FTSE has had 4 days of falls due to Brexit too.

  7. Posted September 15, 2017 at 9:25 pm | Permalink

    Sky News says the higher pound will hurt exports.

  8. Posted September 15, 2017 at 9:27 pm | Permalink

    Ryanair is cancelling flights to increase service. Ryanair is Irish low-cost airline.

    • Posted September 16, 2017 at 6:24 am | Permalink

      perhaps it will invest in better jets !

      • Posted September 16, 2017 at 9:20 am | Permalink

        I keep going back to my book-in-process making sentences and words easier. I may end up plagiarizing and simply write as the entire text ” 42 ” . I have a title which will not change, however.

  9. Posted September 15, 2017 at 10:11 pm | Permalink

    A fall in the number of Tube passengers was blamed on Brexit.

    So nothing to do with :-

    1 fear about terror attacks

    2 Waterloo rail station – a big feeder for the Tube – being out of service for three weeks

    3 the cost of fares.

  10. Posted September 15, 2017 at 10:19 pm | Permalink

    Given this governor’s track record with forward guidance, it is of serious concern that there are market participants that respond. I suspect volatility will be high.

  11. Posted September 15, 2017 at 10:37 pm | Permalink

    Mr Carney will wait to see what the Fed will do in regard to interest rates. We could have a parrot instead of a BoE Governor.

    • Posted September 16, 2017 at 6:11 pm | Permalink

      The US Federal Reserve has raised its key interest rate by 0.25%, the second increase this year. The central bank voted to raise its key rate target to a range of 1% to 1.25%.

  12. Posted September 15, 2017 at 11:07 pm | Permalink

    Of course, apart from all the hype, we are living in the most peaceful world we have ever had.
    Apart from nuclear weapons, no one has sufficient armaments for even invading say the areas the Third Reich invaded. Who wants to own the Eiffel Tower anyway? Pile of junk.

  13. Posted September 16, 2017 at 2:52 am | Permalink

    If Theresa May is planning to go to Florence to sell out on brexit then she should be replaced immediately. She recklessly gambled with Brexit by calling the election on June 8 and cannot be allowed to continue a cosmetic brexit where she is simply signing us back up to the single market, customs union, ECJ jurisdiction, freedom of movement, ongoing payments into the EU budget, EU defence & security and the other measures of EU membership that the country voted against. Time to act. Better to risk going into an election with a leader prepared to deliver Brexit than one who has stood up in Florence to announce a capitulation.

    • Posted September 16, 2017 at 12:22 pm | Permalink

      I like the idea that she might be trying to strategically split the EU, which is Britain’s traditional role viz. the Continent anyway. Although she is, essentially, a spineless social climber, there is an upside to that downside in that it means she knows how to manoeuvre and ‘play’ the system.

      Let’s get them sweating. She should go in there and wind them up good and proper, and say something like: Britain believes in economic liberty and free trade, subject to national interests. We intend to pursue those goals and anybody who agrees with us is welcome to join us on our path towards a global future, etc., etc.

  14. Posted September 16, 2017 at 6:04 am | Permalink

    Nothing is helped by Boris’s latest outburst clearly designed to undermine the PM – and if he keeps this up will eventually lead us into the wilderness – The EU side with Barnier at the helm will have to be quietly smiling to themselves this morning with Verhofstadt looking on in amazement at how a country already going downhill could commit such self harm. Now what’s that you were saying about the Pound? Jeez

    • Posted September 16, 2017 at 6:26 am | Permalink

      He has already ben branded as a lollipop so t won’t do him much good.

    • Posted September 16, 2017 at 8:12 am | Permalink

      Nothing unusual in Boris’s speech, just a positive recount of how we can exploit Brexit!

  15. Posted September 16, 2017 at 6:43 am | Permalink

    Another plank of the remoaners argument crushed

  16. Posted September 16, 2017 at 6:49 am | Permalink

    JR – Off topic – but a point I’ve raised before…

    Keeping converstaions going – For whatever reason my posts require your approval (I assume that is because you want to make sure you read what I have to say because it is so intuitive), however, this does mean when I reply to older posts, that approval gets forgotten – so the converstaion dies – It would be nice to find a way to keep all posts live and active…so that information can be continually added as things develop.

    PS – apologies for my long posts

  17. Posted September 16, 2017 at 7:17 am | Permalink

    Thank you Brexit for raising the pound.

  18. Posted September 16, 2017 at 7:55 am | Permalink

    I think you should thank inflation reaching 3% which you say does not exist. The market does not share your opinion and think that a BOE hike is on the table.

    By the way, what happens to the mantra often reported by the Leave side that “the pound is overvalued and a lower pound is good for exports” now ?

    And what happens to the economy now that rates keep rising and uncertainties remain high ?

    Brexit: the gift that keeps giving.

  19. Posted September 16, 2017 at 8:13 am | Permalink

    I would prefer not to refer to leaving the EU when talking about economic indicators. It hasn’t happened yet and the ongoing uncertainty means the worst case scenario has already been priced in. Any upward or downward trends will be affected by other factors.

    Sterling’s recent upward movement based on interest rate rumours would seem to show that Mr Carney should not have stoked market fears last year by reducing rates as a pre-emptive move he should have reacted to the market as it was not how he imagined it would be based upon his political prejudices.

    We are owed an apology for the subsequent inflation caused by the prolonged devaluation of sterling. I hope this is addressed in any letters to the Chancellor who shares his prejudices.

  20. Posted September 16, 2017 at 8:32 am | Permalink

    The moment that Carney gave his statement , the Stock Markets fell !( like giving with one hand and taking away with another ). Private debt is the biggest pull on our ability to move in the right direction ; there has to be a major shift in the public’s discipline .

  21. Posted September 16, 2017 at 8:42 am | Permalink

    The US Dollar has dropped 6% against the XDR (Special Drawing Right) since Trump arrived. The Pound would buy 1.12 XDR just after the 2015 general election. It hit a low of 0.88 in Oct 2016, it was 0.95 yesterday.

    It is the Pound against the Euro that matters. The ECB fortunately, does not currently promote the Euro as a global transaction currency, (but the Euro does it anyway); it has enough problems trying to make it work for the nineteen Eurozone states.

  22. Posted September 16, 2017 at 9:30 am | Permalink

    Good morning.

    No, but it is a sign that inflation is now creeping in due to QE.

    This will further effect the housing market and retail business. Which in turn, may very well lead to a slowdown in the economy.

    But never mind, we have MP’s safe in their jobs until 5th May 2022.

  23. Posted September 16, 2017 at 9:39 am | Permalink

    As shown in the chart on page 24 of the Commons Library report here:

    http://researchbriefings.parliament.uk/ResearchBriefing/Summary/CBP-8080

    the sterling trade weighted index peaked in the autumn of 2015, trended downwards through the whole of 2016 and maybe bottomed in the spring of 2017. The fall in sterling after the EU referendum followed the pre-existing broad trend, and it is doubtful that the recent rises in its external value will be pronounced in the charts over the longer term.

  24. Posted September 16, 2017 at 9:45 am | Permalink

    Rates go down, then they go up. It’s what they do. Like buses, there will be one along eventually. Static markets produce no profits for the gamblers. Nothing to see here, move along please.

  25. Posted September 16, 2017 at 12:34 pm | Permalink

    The other night I had a dream. I was in a world where the BBC reported the facts and in an even-handed way without the political slant towards the EU, and without the snide nuances against Brexit in almost everything they do.

    Then the day dawned grey and I awoke to the cold reality of the EU’s British-based mouthpiece rubbishing this country’s best opportunity to reclaim its democracy in many a long year.

    I wonder if the BBC will ever change its ways once we have finally left, or will it still keep on fighting the corner of a foreign entity?

    Tad Davison

    Cambridge

  26. Posted September 16, 2017 at 7:36 pm | Permalink

    I was surprised by how much Sterling recovered after a few comments. This shows why Base Rate must be increased asap, but will the Bank of England have the bottle to actually do it? Public sector unions should add to the pressure on the Bank as a rise in Base Rate will reduce the rate of inflation and hence make their pay cap less painful.

  27. Posted September 17, 2017 at 4:23 am | Permalink

    XBP is currently tagging the long term tend line which used to be support and is now resistance- it used to be above it, but is now beneath .

    It means, in terms of technical chart analysis, that the pound is not (yet) showing strength. The move is typically followed by further downside.

  28. Posted September 17, 2017 at 11:57 am | Permalink

    I think you answered the question – it’s down to an expected interest rate rise…nothing to do with Brexit which doesn’t even happen for 18 months.

  • About John Redwood


    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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