Exchange rate update Pound Sterling against Euro, Dollar, New Zealand Dollar and Swiss Franc
The Pound has continued to weaken against the Euro even with the ongoing Greek debt issues.
To many it just does not make sense just how the Euro continues to gain against the Pound with all of the problems in Europe, and if I am honest then I personally am quite surprised we aren’t closer to 1.20 than 1.10, however by the look of it we may well even drop well below 1.10 in the near term before things get better.
One of the helping factors this morning is the new leader of the IMF being European, this suggests that they will be slighly more pro Euro assistance and could well continue to strengthen the Euro over the course of the week. The head of the European Central Bank Jean Claude Trichet also has been hinting throughout June that we should see another rate hike for Europe.
For those that aren’t aware, a rate hike is generally seen as positive for the currency concerned however I personally believe this one has been priced into the market already. Today we see Greek Austerity measures hitting the headlines, personally I feel we may see a little Euro weakness dependant on the outcome as I feel there could be big trouble over there should this be passed.
In short, an important week ahead for the Euro – watch this space for how things actually pan out.
The Pound has been range bound against the Dollar of late, I would expect this to continue in the near term without any major surprises popping up. It seems that the Pound is dipping just over and just below the 1.60 barrier.
Sterling New Zealand Dollar
A tricky currency pairing of late – The New Zealand Dollar has made huge gains against the Pound of late and this is due to a couple of factors in my opinion.
Firstly, carry trading is playing a huge part in todays market – this is where someone borrows money in a currency with a very low interest rate (JPY,GBP) and shifts the funds over to a currency with a very high interest rate (AUD, NZD) gaining their return on the interest.
This some day I believe will unwind rapidly and cause huge weakness to the Australian Dollar and New Zealand Dollar, however we could well be waiting quite some time to see this.
Secondly, much like Japan – I believe that New Zealand may be selling off their investments worldwide and bringing them back into NZD in order to fix and recover from the horrible earthquakes that have rocked their capital of late.
Sterling Swiss Franc
Personally, I cannot see the rates against the new fashionable safe haven of currencies for too long. It will no doubt start having an impact on the Swiss and things have to turn around at some point.
Those with CHF mortgages must be having a nightmare, I know this because I deal with many and I really do feel for them!
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