Daily Archives: April 13, 2010
Seesaw effect with the EUR-USD exchange rate pairing
The USD-EUR exchange rate has been fascinating recently. There has been a seesaw effect with the USD strengthening one day and then the Euro the next. The 16-nation currency fell to a 10-month low of $1.3268 on March 25, rallied a week later and then slumped to set a second bottom at $1.3283 on April 8. today the Euro is back as high as $1.3628 today after closing yesterday at $1.3592.
The Issues with the so called PIGS of Europe has had damaging affects weakening the Euro against the USD and Pound. Now there seems to be some light at the end of the tunnel with a bailout package being agreed we may see the Euro claw back some of its losses against the greenback.
GBP Forecast for a Volatile month
My forecast over the next month is for volatility and fluctuation for the pound, opposed to a clear trend of strength or weakness. I would expect to see a maximum swing of 3% for the pound against the major currencies such as the USD, EUR and JPY, as the markets try to second guess the outcome of the General Election.
Labour released the details of their manifesto yesterday and we have the Conservative release today. In my opinion the manifestos themselves are unlikely to cause any huge market movement, but the subsequent jostling for leadership in the polls really could cause some big market volatility. Last week, as the conservatives took a more commanding lead in the polls, sterling gained 2.6% against the Euro. That’s and extra €4,350 on a conversion of £150,000. This illustrates the importance of staying in close contact with a currency specialist. At Foreign Currency Direct you will have your own dedicated account manager who can let you know if any spikes do occur.
