back to article Sterling's post-Brexit dollar woes are forcing up tech kit prices

Tech vendors don’t want to admit it but CIOs will need to return to their spending plan spreadsheets: hardware is going to get more expensive post-Brexit as sterling slides against the US dollar. The UK currency fell 12 per cent on 24 June when the outcome of the EU referendum emerged, and this week the pound plunged to a 31 …

  1. Steve Davies 3 Silver badge
    Pint

    Only $1.34 to the point?

    I was under the impression that US Companies only ever used $1 == £1.

    Given the extra we have to pay (before BREXIT) it seems that way.

    If the pound sinks any lower they'll lower it to £1 == $0.50.

    Anyway, time for a pint while I can still afford it.

    1. Alan Brown Silver badge

      Re: Only $1.34 to the point?

      "I was under the impression that US Companies only ever used $1 == £1."

      Some used $1 = £2, many still use $1 = £1.50

    2. goldcd

      Re: Only $1.34 to the point?

      Chuck on the VAT @ 20% and the gap's over halved.

  2. Anonymous Coward
    Anonymous Coward

    Just In

    Received latest SAP BI price list today. About 20% across the board. Looks like they're milking it. Just waiting for new rebate scheme for resellers - won't be long,

    1. Dr Stephen Jones

      Burying the news

      SAP is a German company. The sterling to Euro exchange rate was around 1 : 1.25 for most of 2014 and spring this year. It's now just under 1 : 1.20. There has not been much of a sterling to Euro fluctuation.

      http://www.xe.com/currencycharts/?from=GBP&to=EUR&view=2Y

      There is no justification for a 20% price hike.

      So the headline should really be: Giant multinationals uses Brexit as an excuse to gouge their customers. I am guessing this news upset the new corporate El Reg and its multinational-friendly ethos. Does anyone still bite the hand that feeds IT?

      1. Paul Kunert

        Re: Burying the news

        Hello Doc, I sent you an email about this supposed 20% hike from SAP and didn't hear from you. I've also contacted SAP and a bunch of SAP suppliers in the UK and nobody seems to know anything about it. Do you work for Oracle by any chance? Best, Paul @ The Reg

  3. Mike Shepherd
    Meh

    I think they mean

    ...proudly been a part of the British economy and society for over a century, with a substantial presence. In times of uncertainty, IBM's core values, including the unwavering dedication to the success of all our clients, matter more than ever as a guide for our actions.

    Well, if this management-speak means anything, I'd guess it means "If customers stop buying, we'll drop our prices".

  4. John Crisp

    Leave...

    You wanted it. You can pay for it. Suckers.

    Just makes the UK more isolated and easier prey to the global whirlwind

    N.B. I am not a fan of globalisation, but it is currently inescapable..... changing it is important, but until you do you cannot escape it

    1. Dadmin
      Pint

      Re: Leave...

      "the pound could reach parity with the dollar by the end of December or the start of 2017"

      Yeah, the Brits sure took it to those damn immigrants! HAHAHAHAHA! What a bunch of limey dopes!

      Don't believe everything you see on the Beeb. Turns out the only people with average or above IQs live in the greater London area, and Ireland/Scotland.

      "the pound could reach parity with the dollar by the end of December or the start of 2017"

      This is SO FUNNY! Let's continue to monitor the situation for more hilarity! Donald Trump salutes you, Great Britishionians! Good on you, mate! Put another Pound on the barbie, will you?!

      1. Anonymous Coward
        Anonymous Coward

        Re: Leave...

        http://www.usdebtclock.org

      2. billse10

        Re: Leave...

        best joke of the week.

        The UK and the US are running a competition to see who has the mostly offensively stupid politicians with most gullible supporters. The UK is currently ahead, courtesy of Farage and pals. The US has yet to play it's Trump card.

      3. Anonymous Coward
        Anonymous Coward

        Re: Leave...

        Don't believe everything you see on the Beeb. Turns out the only people with average or above IQs live in the greater London area, and Ireland/Scotland.

        And Liverpool & Manchester.

    2. Dr Stephen Jones

      Re: Leave...

      "N.B. I am not a fan of globalisation, but it is currently inescapable"

      No, you're just making excuses.

      A sensible immigration policy lets employers hire skilled workers from abroad without lots of red tape. We consciously took the decision to replace low skilled workers with cheaper imported substitutes. Then we ran the education system down so our own can't read or write. Which means we need more cheaper imported workers...

      Stop blaming globalisation and take some responsibility.

    3. Matt Bryant Silver badge
      Happy

      Re: John Crisp Re: Leave...

      ".....Just makes the UK more isolated and easier prey to the global whirlwind...." <Yawn> Sorry, I must have missed the (expected) blip in the Sterling price. Indeed, all the anticipated "furour" in the markets has ended and prices are trading back higher than pre-Brexit. Sterling on the NYSE is currently higher than it has been for the majority of the year to date. The EU leaders might wish the pound to drop seeing as it has been trending up against the Euro for five years (http://www.londonstockexchange.com/exchange/prices-and-markets/international-markets/rates/chart/gbpeur.html), but the disaster wished upon the UK by so many "caring, sharing" lEUsers simply hasn't happened. Any price hikes have nothing to do with the Brexit, despite the willful melodramatics of El Reg's Molehill-to-Mountains Department, nor the wishful thinking of bitter lEUsers acting like jilted teens; "Wah, wah, the UK won't go to the prom with me!"

      1. phuzz Silver badge
        Facepalm

        Re: John Crisp Leave...

        Ten seconds checking currency rates shows me that I can buy less dollars today (1.33) than I could last month (1.45), or even last year (1.55).

        Still, nothing to worry about right?

  5. Tromos

    "the pound could reach parity with the dollar"

    Tech kit prices have had this factored in for decades.

    1. Matt Bryant Silver badge

      Re: Tromos Re: "the pound could reach parity with the dollar"

      "Tech kit prices have had this factored in for decades." IIRC, all the vendors, and therefore all the resellers, do their pricing in USD in the UK, regardless of what currency they put on the customers' bills. Even non-Yank Lenovo!

  6. Rick Brasche

    and yet still

    yet still superior to the dollar. and when I try to find something about where the Euro is post Brexit all I get is pages of google results talking about the pound sterling. Best I can find is "forecasts" but I want to see what happened "the day of" and it's positively BURIED. Best I see is Euro vs dollar and while theres a huge spike "the day of" as currency speculators jumped in, there's a drop right after.

    If Brexit was such a bad thing why is the Euro *stronger* against the dollar for the last week than before?

    when our President or other world leaders announce something and there's market drops, we're told its about "covering ones bases" or "ignorance" or "reactionary" or any sort of dismissive term when those in the biggest echelons of power and money want to promote whatever is spoken of.

    When something those Consortiums do not wish to see happens and there is an economic drop suddenly it's "indicative" and "proves" that whatever happened was a "bad thing".

    Post Brexit fecal deposition is because a lot of money and power players are finding they have less control than they did before, and their subsidiary mouthpieces are here to make the peons believe it.

    An organization that created the money first, then the trade agreements, then a few years later bothered to start thinking about a Constitution that the people would live under and potentially be protected by, anyone with memory not ruined by social media or recreational chemicals knows the order of priority as this was established.

    the hype and intentional confusion between the EU and NATO is just another bit of icing on the FUD cake.

    1. Douglas Lowe

      Re: and yet still

      Sorry, but you're plain wrong. The euro has got weaker against the dollar, not stronger - it dropped from roughly 1.125 dollars to 1.100 dollars after the referendum.

      http://www.xe.com/currencycharts/?from=EUR&to=USD&view=1M

      1. John Gamble
        Boffin

        Re: and yet still

        Which doesn't have much to do with actual value, at least for the moment. In the usual panic that occurs after a turmoil, people with money (yes, including those people whose preferred currency is the euro) shoved their cash in things like U.S. Treasury bonds, and went stock-picking in the U.S. stock markets.

        We really won't know what the actual effects of Brexit are on the euro and pound until things are a lot more settled.

        1. Warm Braw Silver badge

          Re: and yet still

          We really won't know ... the actual effects

          However, there does seem to be (rare) consensus among economists that the pound was already overvalued before Brexit, given Britain's trade deficit and that a fall in the value of Sterling was ultimately inevitable. The strong hint that the BoE will reduce interest rates will reinforce this tendency, so I think we know the direction of travel, even if we don't know the length of the journey.

      2. Mephistro Silver badge

        Re: and yet still

        Right now (2016/07/02), Euro/dollar exchange rate has recovered the levels it had before the Brexit referendum. It's even higher now!

        http://www.xe.com/currencycharts/?from=EUR&to=USD&view=1W

        1. veti Silver badge

          Re: and yet still

          @Mephistro: nice strategic use of cutoff points there. If you look at the 1-week chart (the link you posted) sure enough, it shows that the euro is very slightly higher against the dollar than it was immediately after the referendum.

          If you look at that same timescale, you'd say that the pound has dropped less than 1%:

          http://www.xe.com/currencycharts/?from=GBP&to=USD&view=1W

          But if you look at the one-month charts for both, I don't think you'll have any difficulty picking out the referendum results being announced:

          http://www.xe.com/currencycharts/?from=EUR&to=USD&view=1M

          http://www.xe.com/currencycharts/?from=GBP&to=USD&view=1M

          Of course, if you take a slightly longer view, you'll see this is far from the worst thing that's happened to sterling, even in the last ten years:

          http://www.xe.com/currencycharts/?from=USD&to=GBP&view=10Y

          The pound dropped by 25% in 1992, when it exited the ERM. It dropped by more than 30% during the 1970s. It's dropped just 10% since the referendum; even if it's got another 10% to go before it levels out, this is still not a really world-class shock.

          1. Mephistro Silver badge
            Pint

            Re: and yet still (@ veti)

            "@Mephistro: nice strategic use of cutoff points there"

            Ehh... yes and no. The page only allows for fixed periods of time-day, week, month...- counting back from the present. If you use the sliding bar below the graphic to move/change the length of the time period, it doesn't show on the linked URL.

            So I revisited the page and checked again for that time period and... the graph didn't even look like what I remember. :-(

            Possibilities, in order of relevance, as perceived by me:

            1- First and foremost, I screwed up! If this was the case, it was a honest mistake. Could be that I didn't press the chart refresh button. Actually I was a little bit surprised that the € had recovered so fast, but didn't bother to check the graph's data.

            2- Being ~2 AM and in the weekend, the site could be using old data or test data. Next time I link one of these websites, I'll make an screen capture and store it, just in case.

            3- The Illuminati did it!

            I'll go and commit seppuku now.

  7. Anonymous Coward
    Anonymous Coward

    The currency markets will be a mess for a couple of weeks while governments around the world work out how to get *their* currency back down. Those most at risk could be the banks (again).

  8. Anonymous Coward
    Anonymous Coward

    Dell

    Dell sent out an email last week advising of imminent price rises. I advised them I expected Sir Alan Sugar to step up to the mark and would then only buy British Amstrad servers.

  9. Anonymous Coward
    Anonymous Coward

    "The UK currency fell 12 per cent on 24 June"

    More accurately, it rose 5% when speculators thought remain would win and then dropped to 7% below where it had been when they got their fingers burnt when everyone realize leave would win.

    Anyway, it seems touching that Guardian readers have become so concerned over the propsects for the finace sector workers in Lomdon and whether they'll be sacked or forced to move to Paris/Frankfurt/etc ....I'm sure a few years ago when they said they might leave the country if tax rose to 50% they the line then was "go then, we won't miss you"

    1. Richard 12 Silver badge

      A fall against USD costs everyone, especially those who drive, use public transport or buy food and other goods transported by road or rail.

      It also increases the cost of things imported from China, as they are priced in USD as well.

      1. P. Lee Silver badge
        Holmes

        >A fall against USD costs everyone, especially those who drive, use public transport or buy food and other goods transported by road or rail.

        So imports are more expensive, and exports are proportionally more competitive.

        Isn't that a *good* thing for British business? Even if you import your raw materials, your value-added end product will be more competitive on the world market. More cash to be made trading from the UK, more stuff made and consumed locally.

        That's assuming that that the currency effect is all its being made out to be, rather than fluff and spin...

        1. hammarbtyp Silver badge

          That only works if you are not a major importer. The UK is a added value economy. We buy things i, add value and send them out again. Low £ means that yes the things we send out will be cheaper, but the materials will be more expensive. That means the profit margin will be lower, meaning unless sales are much higher, profits will be much lower. So say we sell 5% more cars because they are cheaper, that might not be enough to make up for the increased costs. Companies might decide to reduce labour, move the work to places where raw materials are cheaper, or put off investment.

          The worst case scenario is stagflation. Prices go up because of import costs, hitting inflation. However wages cannot rise because of low profitability so you get a recession and inflation. Not nice

          1. Alan Brown Silver badge

            "So say we sell 5% more cars because they are cheaper, that might not be enough to make up for the increased costs. "

            Nor will it be enough to make up for the 10% WTO default import tarriff.

            End result: carmaking will move out of the UK.

        2. Alan Brown Silver badge

          "exports are proportionally more competitive."

          Only if your raw materials are locally sourced or you have a very high labour/added-value content.

  10. J.G.Harston Silver badge

    USD/GBP has been on a continuous downward trend since 2014 anyway. Part of a longer downward trend since 2008.

  11. Anonymous Coward
    Anonymous Coward

    *yawn*

    Check the latest value of the Pound against the Dollar, it's already climbing back up.

    But if you check the trend over the last few years, you'll see that the trend has been gradually downwards from a value of (aprox) 1.6 in 2012 to 1.4 in 2016.

    All "Brexit" has caused, is a typical market fluctuation to world events.

    1. wolfetone Silver badge

      Re: *yawn*

      Well what else would you expect when the spectre of Brexit hung over the country?

      It'd be better to compare it to a year ago and see what's actually happened.

      What's that? £1 = $1.56 pre Brexit?

      No matter how much sterling climbs against other currencies, the fact it fell like a stone in the first place wiping Billions and Trillions off the values of pensions etc is still problematic.

      1. Anonymous Coward
        Anonymous Coward

        Re: *yawn*

        Complete and utter tosh. You're not a Sun reader by any chance are you?

        Share value has already reached pre brexit panic levels and the Dollar/Pound exchange rate is also returning to its previous level (albeit more slowly). It's long term trends that matter, not short term fluctuations.

        "Billions and Trillions" have NOT been wiped off the values pensions etc.

        1. wolfetone Silver badge

          Re: *yawn*

          "Complete and utter tosh. You're not a Sun reader by any chance are you?"

          Oh I see, it's only tosh when your logic is used against you. Look it up, July 1st 2015 thats what sterling was trading at before all of this referendum talk. Since then sterling has been slipping to the rate it's at now. And don't sully me with reading The S*n.

          "It's long term trends that matter, not short term fluctuations."

          Quite right. So let's see how things pan out when Article 50 is triggered. But it won't be going up!

  12. Anonymous Coward
    Happy

    Don't worry...

    The Americans will vote in Trump, and that'll sort out the dollar.

  13. Nifty

    From the article

    "But neither were unable to find the right words"

    Me no comprendez

  14. Anonymous Coward
    Anonymous Coward

    Don't annoy the customer

    Most of the companies that you polled sell to the government. Given that we don't actually know who the government is right now or will be come the next contract, they are all being very careful not to say anything that might be construed as criticism of anyone who played a part in the drama that is still unfolding.

    AC, because I work for one of them and we are treading very softly right now.

  15. wjthompson

    On the phone with someone from the UK yesterday, mention it was Canada day and Monday is the 4th of July. He mentions they, too, will have their own independence day! (yay, right?) Sounds great, but given people celebrate being freed of the UK ... wouldn't it be the EU's independence day?

    Also ... he hates the word Brexit. The more you know ...

    1. Anonymous Coward
      Trollface

      Cry Freedom!

      Free at last, free at last. I thank God we're free at last!!

  16. toplard

    Does this mean the real market clearing price - no longer protected by the EU(and raising the price artificially) - now been discovered? Is this not a good thing for *all* buyers and sellers? The artificial tax protecting just a few and raising the price for the many, now removed, appears to mean things will actually be cheaper for the market in general. Notwithstanding the abolition of any destructive distortions that protective duties cause. Alas, the few who were getting the freebies are now back out in the free market, where the best win. Ho hum...

  17. Netata
    Happy

    Bye British

    Perhaps the best option is not to buy from the US, but to set up a UK company and buy British. There is no reason why intelligent people here can't do the same as those across the pond;buy cheap from the East and then sell to others.

    If we allow ourselves to be caught in the same rut, when things change, then we might as well say Bye Britain.

  18. Netata
    Coat

    Bye British

    Perhaps the best option is not to buy from the US, but to set up a UK company and buy British. There is no reason why intelligent people here can't do the same as those across the pond;buy cheap hardware from the East and then add software and sell to others.

    If we allow ourselves to be caught in the same rut, when things change, then we might as well say Bye Britain.

  19. Netata

    Bye British

    Perhaps the best option is not to buy from the US, but to set up a UK company and buy British. There is no reason why intelligent people here can't do the same as those across the pond;buy cheap from the East and then sell to others.

    If we allow ourselves to be caught in the same rut, when things change, then we might as well say Bye Britain.

  20. Netata
    Coat

    Bye British

    Perhaps the best option is not to buy from the US, but to set up a UK company and buy British. There is no reason why intelligent people here can't do the same as those across the pond;buy cheap from the East and then sell to others.

    If we allow ourselves to be caught in the same rut, when things change, then we might as well say Bye Britain.

  21. Anonymous Coward
    Anonymous Coward

    Bye British

    Perhaps the best option is not to buy from the US, but to set up a UK company and buy British. There is no reason why intelligent people here can't do the same as those across the pond;buy cheap from the East and then sell to others.

    If we allow ourselves to be caught in the same rut, when things change, then we might as well say Bye Britain.

  22. wolfetone Silver badge
    FAIL

    Bye British?

    The awkward moment when you post the same comment 5 times, but on the 5th time you decide to become an Anonymous Coward....

    1. Mephistro Silver badge
      Coffee/keyboard

      Re: Bye British?

      ROFLMAO++

      And this is why I come back now and then to read ancient discussions.

      Thank you, Sir.

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