Well hasn't this thread been busy today.
Looking at US and GB currencies only there is not a strong likelihood of any big movements this year but next year the chances are much better.
The GBP will be in for a tough time through 2011 as the British people are forced to swallow their foul tasting financial medicine. The next big event will be the 2011 budget
at which the Chancellor will endeavor disclose as few unpleasant cards as possible. He is a politician after all. The GBP may fall through this year as the bad news dribbles out of the Exchequer but there is an excellent chance of the pound beginning to rise next year provided all the bad medicine is in the open by then. Being good and dutiful politicians they will be bound to tell a few lies so much may depend on how many undisclosed nasties are lurking in the shadows.
Back in good ol' USA, uncle Ben has his printing presses running round the clock and will soon find himself working even harder. No budget
slashes for those guys ! Some time in March Congress will vote the Federal debt limit up to around 16 trillion, yes folks that's $16,000,000,000,000. The only variable on that vote is the number of strings that the Republicans can successfully attach to the Bill. There are other negative signals to watch for on the USD. Bond yields have been rising (rising = bad) continually since around last July. They are particularly high on long term treasuries telling you that the world has diminishing confidence in the long term prospects for the USD. The yields are even higher on state and municipal bonds and those poor shmucks don't enjoy the luxury of a dollar printer.
Another indicator is the Chinese. Over the past year they have been selling off their US treasury holdings in small amounts. Not by much, but enough to confirm their nervousness. Last year they cut their holdings by 40 billion but then later in the year they started buying
again. Not sure why ? ? ? Despite the Chinese bond buying
the high yields that they demand confirms that the nervousness remains. It has been around for a few years.
If China Stops Lending Us Money, Look Out - EconWatch - CBS News
My bottom line is that I think your banking buddy is wrong. Though 2011 GBP is likely to fall slightly against USD as a result of budget slashes. As the dust settles and in the longer term you could expect GBP to rise against most currencies. Over in Euroland, Italy
have yet to address their gargantuan debts. From 2012 onwards USD looks likely to disappear down the toilet because those guys aren't addressing their debts at all but I don't see much movement this year. Sooner or later the world will scream "enough !" to the US, quit buying treasuries and the USD will plunge.
Hopefully you realise that beside the Chinese the other big buyer of US treasury bonds is the Federal Reserve Bank. I know it's hard to believe but the Fed prints money
out of thin air, wanders down to the bond auctions holding bags bulging with loot and uses that money
to buy bonds. As of a year ago that figure was a little over USD3 trillion and has been rising. Fed money spent on buying up the debts of Fannie, Freddie, student loan bailout, FDIC bank bailouts etc etc are all separate and additional.
Sooner or later the US Federal Reserve is going to find itself dancing the Reichsbank polka.
If currency movements are your main motivating factor then wait a year. Interesting times await us all.