Pound & Euro

[Kenny]

I've been fed up and embarrassed by continually seeing the title of my last posting "Strong Pound" here for so long, hence I have simply replaced it with another "newer" topic with a different title today!  Can't say there has been any consistent forecasting by the financial pundits about how the £ will relate to the Euro and other currencies in the coming year - anyone got any guesses? 

[Bill]

Gradual strengthening of the pound. That's my guess, and it's only a guess because if I knew I'd be very rich.

[scalehill]

Look at it this way; strength of a currency is based on international confidence in the host economy. Let's say a fictional country had;

sold off all its gold reserves not long before a global spike in metal prices
destroyed its manufacturing economy in favour of financial services
lost its reputation as a centre for financial services due to incompetence and criminality
subjugated its foreign policies to the wants of an imperialist expansionist partner
had no geographic reserves to self-provide energy needs
bankrupted its infrastructure in pursuit of funding an illegal an unwinable war to forcibly take oil reserves
decided to begin the process of closing its Universities by pauperising them with funding reduction

Forget a longer list, those alone would mitigate against any recovery of a fallen currency in anything other than a generation. The UK begging to join the Euro is a much more likely short to mid term possibility.

[Kenny]

Much as expected, I see that other members of the Euro club have today decided to prop-up the Greek economy.  It will be interesting to see what follows but it is bound to increase the chances that others who having a similarly difficult time like Spain, Portugal, Ireland, Italy and Hungary will be queuing up for the same treatment before long. 

[Jasmine]

I wonder what the impact of a hung parliament would be on the pound?  Also the problems of Greece, and other states in the Eurozone may have implications for the euro as a whole, especially as Germany seems reluctant to bail out other countries which do not seem to have its financial discipline.

[Bill]

I think it depends on the nature of the 'hung parliament', or more exactly, the degree of confidence that the financial markets have in its ability to govern. The English media seems to have been involved in its customary scaremongering, because they tend to have vested interests in particular parties gaining power.

I suppose it's not beyond possibility that a coalition of the other two might be seen in Europe as a better bet than the present government retaining power, but who can say until the power sharing details are worked out?

Most of Europe, notably Germany, manages perfectly well with coalition governments.