Pound Sterling Forecast

The markets at the moment are some of the hardest to second guess and second guess is best that we can ever do. There have been comments that we are facing financial Armageddon just like when the globe went into a recession in 2008. Stock markets around the world took some of their biggest losses in history with American stock markets finishing the trading session with their 6th worst day in history and in the UK the FTSE lost over 100 points for the forth session in a row for the first time in its history.

Investors are extremely worried about fears of a double dip recession hitting the US after their AAA rating was cut on the weekend and the ongoing saga that is the sovereign debt crisis sweeping through the Euro zone. The one bright shinning light during this crisis for holders of sterling is that the pound has strengthened against a host of majors in the last 4-5weeks. We have witnessed superb gains by spiking up to 2 month highs against the Euro, up to 6 cents against the USD, and 10 cents against the KIWI & AUSSIE Dollar.

With the uncertainty that is sweeping through financial markets, here on the trading floor at currencies.co.uk we have witnessed some of the busiest trading sessions that I can recall. This is because clients are nervous and rightly so as they do not know how far their currency exchange will go tomorrow.

During times of uncertainty more is lost to the market through being indecisive than making a decision to proceed and sticking to it. The smart clients seem to be capitalising on the gains that sterling has achieved in the last few days and now may be a prime time to lock into a forward contract. For a small deposit you can secure your rate of exchange for up to two years giving you the peace of mind aspect when what is potentially the biggest currency exchange you will ever make. Spikes in the market do not often last for long so please feel free to call me on 01494 787 474 and we can discuss if this option may be suitable for your specific currency pairing and requirement.

Tomorrow will witness the biggest data release for the UK this week. The Bank of England’s quarterly inflation report will provide some indication on monetary policy going forward while we expect to see growth forecasts cut for the UK economy. This is the data release that I feel will weaken the pound from its current highs.

If growth forecasts are cut then that will be a clear sign that we will not see an interest rate rise this year and could lead to further rumours of the dreaded QE, which in the past has sent the pound spiralling downwards. I would personally recommend securing your currency before this release so if you require a trading facility and do not have one yet please call me on 01494 787474 and I will explain how to activate one. Alternatively you can email at bma@currencies.co.uk