GBP and all that Brexit hoopla

[Trevor]

I thought I'd post a note here for those that might not follow these things closely. The GBP has been under pressure of late due, in part, to the discussions around British exit from the Euro group. Today it dropped below the GBP/USD 1.40 mark. Chances are there will be continued weakness as this continues to play out, up to the time of the actual vote.

Now, why do we care? Opinions will vary on whether a Brexit is good or bad, likely or not, etc etc. But it will most certainly bring pressure on the currency for the near term which is good for those that are looking to buy parts there and send them here.

If, in the unlikely case, brits vote to exit outright (pretty unlikely, but possible), the GBP will suffer further. But watch the polls as it get closer. If they start to show a chance of that happening the market will front run that possibility and the currency will weaken further. Might be a good opportunity to purchase some of those larger parts you've been pondering.

But you may not want to wait past the vote itself. If the Brexit side loses, GBP regains some strength. 

[Red90]

Enough mumbo jumbo.  Tell us when the pound bottoms so that we can stock up on Rover parts....   ;D

[Trevor]

Enough mumbo jumbo.  Tell us when the pound bottoms so that we can stock up on Rover parts....   ;D

Doh! I just dropped my crystal ball, and it was my last one too!  ;D

[Red90]

With the US heading for insanity, it is hard to predict who will find a lower bottom to hit. :o

[Matt H]

I hope Britain does leave. Doesn't mean there can't be trade agreements.

Perhaps then we could enforce our own laws, buy some of own products, farm our own fields, fish our own shores and control immigration to our own country.

IMHO the EU has been falling apart for years anyway.

The low Sterling would be even nicer if the Loonie wasn't also so low.

[binch]

I hope Britain does leave. Doesn't mean there can't be trade agreements.

Perhaps then we could enforce our own laws, buy some of own products, farm our own fields, fish our own shores and control immigration to our own country.

IMHO the EU has been falling apart for years anyway.

The low Sterling would be even nicer if the Loonie wasn't also so low.

I hear a great deal of this sentiment when we are over there!

[ugly_90]

Had been noting the brexit vote. It's hard to ponder how our Canadian pesos will do against the pound. I would expect USD to do well. The Euro could fall too when it loses the UK, perhaps importing a LHD landy from southern europe will become more attractive then.

[binch]

England doesn't use the Euro...they kept the pound.    So far the pound and the cdn dollar are holding their relative positions against the much stronger USD.    But not to worry....Greece and Spain will prop up the Euro if it falters.... ahhahahhahhah

[Red90]

Actually we have gained 2% against the pound in the last week or so.

[ugly_90]

Yes, do note that the pound and euro are seperate, a bit misleading by my earlier post, no chance of any Euro currency movement with a political loss of the pound-denominated UK from the EU then? The 2% gain is a fairly small one. I'd like to see the exchange rates of a few years ago again, but I don't think they'll happen again in the next few years.

Fuel for transport is certainly cheaper, so perhaps it'll all wash out.

[Matt H]

It's been predicted that the EU will become increasingly unviable without Britain as a member state. But even if it survives I imagine the effect on the Euro won't be positive.

[Trevor]

Had been noting the brexit vote. It's hard to ponder how our Canadian pesos will do against the pound. I would expect USD to do well. The Euro could fall too when it loses the UK, perhaps importing a LHD landy from southern europe will become more attractive then.

Measuring currencies is a tricky thing. The USD will likely weaken somewhat as it had a very big run up over the last 2 years. The strength in that currency was driven by 2 main factors...(a) The "formal" end of QE 3 has pulled the throttle back on that source of money printing, and (b) the Dec interest rate hike. Granted there are many peripheral factors as well (China imploding and their currency devaluation, Europe on a QE-forever program, Japan embracing NIRP, etc) that play an important role, but the 2 listed above are the primaries imo.

Barring a complete meltdown in global markets over the near term (which is a very real possibility), the factors above should keep the US$ somewhat range bound for a time, with slight pressure to the downside. It's very much on the Fed now, so watch what they do for an idea of where the currency is going.

For the Canadian $ I would expect it be somewhat range bound for a while, between the low USD/CAN 1.40 range and the low 1.30's. It may continue to show a small amount of strength, but we need to be careful because that strength is tied very closely to a perceived stabilization in oil prices...which I think is fleeting. If the BoC does anything over the next 1/4 or two its likely going to be rate cuts, not increases, which will pull some of the recent steam out of the Loonie.

So for Land Rover part buyers what does all that mean? I think it puts more emphasis on the GBP than the Loonie or USD for the near term, simply because there is a lot more drama to unfold in Britain yet. Whereas barring an oil price shock, currency moves in Canada and the US are going to be a tad more muted (certainly not irrelevant though) over the coming months. And depending upon which way those winds blow in Britain leading up to the vote, that's going to play noticeably on the GBP.

[binch]

Hahahaha    Careful what you wish for Adam....it wasn't that long ago that the pound was worth 5  :Dbucks

On that note let's put some reality into this topic:

[Red90]

Getting better.

[binch]

Good timing!   I need parts for the RRC rebuild  ;D