Why is the Pound so High?

[Beet]

An invitation for comments on this subject. The challenge is to explain why the pound is not valued much lower, as Britain has all the ingredients that would seem to suggest an overvalued currency.

- Very low interest rates / easy monetary policy
- Slow growth
- Trade deficits
- Budget deficits

Unlike the dollar the pound is not a reserve currency, is it?

[The Vorlon]

I think because the Pound, despite all the problems you have listed is, at least in comparative terms, in better shape the the Euro or the Dollar.

When (not if) Greece defaults, Portugal, Ireland, likely follow. Italy is a house of cards, and Spain could also collapse. (I suspect Spain likley will NOT default, Italy is about 50/50 in my estimation) these will all cause the Euro to take a huge hit (if not disband)

The US, well...... $1.5 Trillion deficit, 11+% of GDP...

The UK is in trouble, but at least the boundaries of the problem are better defined and perhaps a tad more predictable....

The UK economy is sick, but it's likely not a terminal illness, while the PIGS and the US economies may be terminal.....

[Verily]

The UK has a (much) higher public debt per GDP than the US. 76% of GDP v. 59% in the US. (And total external debt in the UK is on the order of 400% of GDP--compared to just 95% in the US.)

[Gustaf]

Is it finally high? I made a bet before on it going up. Going to try and cash in tomorrow.

[The Vorlon]

The UK has a (much) higher public debt per GDP than the US. 76% of GDP v. 59% in the US. (And total external debt in the UK is on the order of 400% of GDP--compared to just 95% in the US.)

I guess it depends how you calculate how bad things are in the US....

Unfunded liabilities in the US, primarily medicare and Social security obligations, are dramatically larger. The US also has a larger structural deficit as a % of GDP.

Both the US and the UK are a house of cards, I think the US house will collapse first because there is some artificial and fake "too big to fail" and "Reserve status" glue hold the house of cards together at the moment...

Canada actually looks pretty good

[Sbane]

Isn't the Euro too high as well, especially considering all it's problems?

[Platypus]

AUD at $1.10 USD. Crazy.

Basically everyone who isn't in the crapper is going up against the Euro and the USD, but 'everyone' is basically just a handful of nations.

[The Vorlon]

AUD at $1.10 USD. Crazy.

Basically everyone who isn't in the crapper is going up against the Euro and the USD, but 'everyone' is basically just a handful of nations.

And that is the issue.... "everybody else" just isn't big enough to soak up all the excess cash that OPEC and China have.

The Canadian Dollar, Swiss France, etc look great but other than bidding them up to absurd prices, there just are not enough of them to soak up all the excess cash.

The Euro and the US Dollar suck so badly that the Pound, AUS $ etc go up because the such somewhat less....

[frihetsivrare]

Swiss francs and Brazilian reais have to be the craziest.  The swiss franc reached $1.30 and 0.90 Euro in the last two days.  When I was in Europe in 2008 the franc was at 0.62 Euro and $1.  Ten years ago it was worth around 58 cents US.  1 Brazilian real is worth 64 cents, compared with around 25 in 2002.  The Chinese yuan would be in the same situation if the peg didn't exist.

[opebo]

I think because the Pound, despite all the problems you have listed is, at least in comparative terms, in better shape the the Euro or the Dollar.

When (not if) Greece defaults, Portugal, Ireland, likely follow. Italy is a house of cards, and Spain could also collapse. (I suspect Spain likley will NOT default, Italy is about 50/50 in my estimation) these will all cause the Euro to take a huge hit (if not disband)

The US, well...... $1.5 Trillion deficit, 11+% of GDP...

The UK is in trouble, but at least the boundaries of the problem are better defined and perhaps a tad more predictable....

The UK economy is sick, but it's likely not a terminal illness, while the PIGS and the US economies may be terminal.....

Oh good lord, what utter diahrea.  The the US economy is fine - ours is not an economic problem, it is a political one.

[○∙◄☻¥tπ[╪AV┼cVê└]

Swiss francs and Brazilian reais have to be the craziest.  The swiss franc reached $1.30 and 0.90 Euro in the last two days.  When I was in Europe in 2008 the franc was at 0.62 Euro and $1.  Ten years ago it was worth around 58 cents US.  1 Brazilian real is worth 64 cents, compared with around 25 in 2002.  The Chinese yuan would be in the same situation if the peg didn't exist.

So, if you elect socialists to run your country, like Brazil did,  8.5 years later your currency will trade 2.5 times better?