The Truth About the Pound
October 27, 2016 – If you think the pound is going steady, read this.
Over the next six months we are expected to see some of the biggest Sterling price swings. Although you don’t see much movement within the pound we are still seeing signs of the affected Brexit move.
The pound is the worst-performing major currency this year with a 17 percent drop from which two weeks ago sank to a 31-year low in a so called flash crash. Societe Generale SA is one of the biggest bulls in Bloomberg’s pound survey, predicting an almost 5 percent rally by year-end to $1.28 and estimating that the U.K. currency has already priced in many of Brexit’s risks.
Apple has used the cover of the iPhone 7 launch to bump up their prices apparently in response to the weak pound. It has been found that they have increased the prices within the UK but kept the original prices in the US.
Consumers may be in for a shock if they think they can delay themselves buying the iPhone 7 so they can get it at a discounted price at a later time. The iPhone 7 is the most obvious offender. The cheapest version of the 6s retailed for £539; its successor, the 32GB iPhone 7, goes for £599 ($649 in the US, then and now). Meanwhile, the highest-end model, with 256GB of storage, is £919 — £100 more than its predecessor.
In 2014 currency fluctuations reduced Apple’s revenue by $3.73 billion; this loss is more than Google made in the whole of 2014! Apple still haven’t improved over the last 2 years.
Weak is Good?
Some have found that the depreciation in the pound has benefits. Some traders are taking advantage of the drop however over the recent months the pounds movement is downward.
And though the $1.25 median year-end prediction is now stronger than the exchange rate, that reflects how difficult it’s been for strategists to keep pace with sterling’s slide, rather than optimism about a bounce.
Are They Outsmarting The Industry?
Many people in Ireland are travelling across the border to Northern Ireland to buy items such as iPhones and Tv’s to then sell them when they are back, as the exchange rate is making it easier for them to make a profit. This is becoming more and more popular as the pound depreciates. They were saving up to £90 on iPhones and TV’s!
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