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US Dollar--British Pound Exchange Rate Forecasts
Posted by: cpw, July 5, 2014 04:35PM
Anybody know where on-line I might get US$ to UKú forecasts? I only need a one-year forecast, but one that has proven reasonably accurate over the years, given the uncertainties of exchange rate forecasting. In the past I've been using [www.forecasts.org] but it's absurdly inaccurate every year.

Re: US Dollar--British Pound Exchange Rate Forecasts
Posted by: Kaye Thomas, July 7, 2014 03:43PM
I'm inclined to believe this is an area in which accurate forecasts are impossible. The rational market response to reliable information indicating that the exchange rate will change in a particular direction would be to anticipate that change, making it take effect now rather than later. After taking into account all changes that can be reliably anticipated, we're left with a market that reflects only changes that could not be predicted.

Having said that, I'll admit I have no specific knowledge of this particular market or whether there are conditions under which it is unable to adjust to an anticipated change. I merely want to point out a reason why it may be difficult or impossible to find accurate forecasts.

Kaye Thomas
Fairmark.com

Re: US Dollar--British Pound Exchange Rate Forecasts
Posted by: jainen, July 7, 2014 06:30PM
cpw Wrote:
-------------------------------------------------------
>>In the past I've been using www.forecasts.org but it's absurdly inaccurate every year<<

Although personally I can't expect to ever get beyond a vague awareness of currency speculation, I was intrigued by the question. I like that Kaye pointed out the inherently self-canceling nature of market predictions.

Yet, of course markets can be successfully predicted, at least within a reasonable risk tolerance. (In Vegas terms, don't bet more than you can afford to lose.) Generally predictions are based on various external influences, so you might study the prior assumptions of forecasts.org and observe what was over or understated according to your own investment preferences. For example, they surely have opinions about the new Federal Reserve chief, Ukraine's move towards Western economies, and emerging technology. It's not hard to find instances where mainstream economists have been way off base.

Unfortunately, so much of fiscal policy is developed in secret. Outsiders mostly have to wait and see. With such a specific time frame, it sounds like you have a specific transaction or relationship in mind. You might find more clarity from that side, rather than the denomination of the payment.



Re: US Dollar--British Pound Exchange Rate Forecasts
Posted by: cpw, July 10, 2014 08:27PM
I do some "speculation" in trying to time the sending of cash (US$) sent to the UK annually for my grandsons' school tuition. Just a 3 or 4 point drop in the exchange rate can make a significant difference in what I end up paying.

Kaye is correct that "accurate" forecasts are impossible, almost by definition. But some forecasters use "rolling" forecasts which are updated very frequently...these are pretty accurate in the short term (a few weeks), and have a decent chance at getting the longer range (up to a year) roughly right. The forecast I'm stuck with shows the pound getting weaker since May. Actually, it's been going up since early June...now approaching $US1.72. And the forecast was done about 5 weeks ago. You'd at least think they'd get the direction correct...and the Bank of England has been pretty quiet, no big perturbations there. I'd like to find something better (updates weekly?) if it exists.

Re: US Dollar--British Pound Exchange Rate Forecasts
Posted by: 47Percent, July 24, 2014 06:47AM
For exchange rates, real long term (5+ years?!) predictions can have some objective basis such as human potential, demographics, infra structure improvement/deterioration, overall fiscal policy, gov't. Stability, legal climate change etc. Short term guesses are always invariably a crap shoot.

I would think the factors affecting the short term fluctuations would be mostly unpredictable factors such as war, terrorism, accidents, market collapse, political shake up and things like market manipulation and heavy trading bet in one direction by someone or some entity. None of these can be forecasted with any degree of accuracy.

Of course there would always be some pundits who predict very very accurately. But you can know who they are only after the fact -- Just like the shameless procession of talking heads you see on CNBC.



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