Do you think sterling is deliberately being kept low against the Euro

The more I hear about how badly Eurozone countries are doing, the more I query why the pound is so weak again the Euro still.  I'm really swaying towards the believe that the British Government are deliberately keeping sterling weak in order to make our exports or products and services attractive.  What are your thoughts? 

Governments are limited in what they can do about exchange artes. The two most obvious  ways that they can influence them negatively are

1.keep interest rates in the UK artificially low..... however, the signs are that a rate rise is iminent, so that's a non-starter

2.Sell sterling on the Foreign Exhanges....that's very visible and would have huge political crepercussions, so I don't think that's happening either

The thing to remember is that while  some Eurozone countries are in the doggy-do-do, the UK isn't much better off...I think that the rates have just found a level that reflects reality as it currently stands.

I'm looking to pay off most of my Spanish mortgage next month, so I'm watching the rates like a hawk. If /  when it hits 1.20 I'll make my move...

Hammersfan,

You missed out number 3.  i.e. Printing money, which they BOE has done.

quote...You missed out number 3.  i.e. Printing money, which they BOE has done....quote

...and lots of it too...and for a long time.

Just as they did in the States where the Dollar to Euro exchange rate is absolutely p*ss poor and has been for some months.

Our income is derived from UK based pensions paid in Sterling and US based affiliate sales paid in US dollars so we get the sticky end of the wedge every time.

One has only to look at the swingeing cuts being applied to the UK forces to realise that actually the UK is probably more broke than Spain; all Harriers withdrawn, brand new Nimrods being broken up, the talk of Tornado Strike aircraft being withdrawn, the closure of bases up and down the UK all to support the building of 3 aircraft carriers that are way overbudget, way overdue, and for which we have no aircraft anyway until 2015.

I have no sympathy for the Cameron / Clegg coalition; they took trying to run a country that was effectively bankrupted by Brown and Blair.

I've said it before and I'll say it again...

"Politicians are like seagulls. They arrive from out of nowhere in a fluster, squawking, sticking their beaks in.... crapping all over everything and then flying off leaving a mess."

"Politicians are like nappies / diapers...They should be changed frequently, and for the same reason."

Billy Connolly: 'Anyone who wants to be a politician should be automatically barred from being one.'

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OK, I didn't mention #3, because it was not a measure  specifically  designed to affect the Exchange Rate, and I was answering the original question which seemed to hint at a conspiricy theory...for which there is no evidence

Ok I know we've started to go slightly off topic but here's my take: 

Actually I think there were (and there still are) a lot of inefficiencies in the public sector.  I may not agree with some of the defence cuts like the Nimrod break-up (and had it been a pure blue government I suspect that would not have been sanctioned; however you've got to admit there is so much money simply pured down the drain and I for one am sick of my taxes being wasted grrrrrr.

The level of inefficiency in the NHS, Defence, Local Government etc beggers belief.   The millions wasted on the super duper computer system for the NHS that was so bad it got dropped, the money wasted on health tourism (the UK should take a harder line on this), the money wasted correcting poor quality inaccurate tax returns........oh I could rant for hours on waste in the public sector.

As for the UK being bust, perhaps if they gave less money away, focused on home first and everybody allows the Coalition 18 months to start seeing the return on policy. 

Yes the BoE has deliberately been keeping the pound low. When your economy is in trouble then it's what most governments/central banks try to do. Since we have been in a global recession you may have come across the term "race to the bottom" as each country tries to devalue their currency against the others. Of course it is impossible for all currencies to devalue simultaneously since they are measured in terms of each other (a "zero sum game"). So there is a real risk of countries trying harder and harder to devalue, which would ultimately lead to currency debasement and very high inflation.

However currency devaluation also causes imported inflation, and in the UK imported inflation has been higher than expected. So many now think  the UK will have to raise interest rates soon to reduce imported inflation, which should in turn increase the value of the pound.
 

Dear All,

share much of what has been said and claim no expertise but surely it must be possible as the US has been accusing China of it for decades.

Regards

Norman