Pound Sterling Forecast

This well known quote from the ‘Sage of Omaha’, Mr Warren Buffett relates to investing attitudes. It is pretty self explanatory but basically states that by going against the current market you can make attractive gains. This is exactly what we have witnessed recently on pound sterling exchange rates. The recent panic caused by the Eurozone debt crisis has cooled slightly today from comments by Angela Merkel the German Chancellor that the Eurozone must stick together. This rhetoric is however not being reflected in other areas with many reports that the Germans are in fact planning for a Greek default. It looks like the uncertainty is going to continue to present volatility on exchange rates and this Euro crisis affects not just the Euro rate, but nearly all other major currencies. Hence why we have seen major movements recently on all the majors.

Higher inflation figures released this morning for the UK at 4.5% have caused some sterling weakness as it gives less credibility to the economic policy for the UK. I believe we have also seen lots of investors taking heed of Mr. Buffett’s advice and taking some of the profits they made last week and yesterday. The pound has lost over a cent from yesterday’s highs but gained slightly against the resurgent US dollar. The Aussie and Kiwi have clawed back some ground as investors again take profits and on the back of Merkel’s comments.

We still have quite a busy week ahead for the pound with Unemployment Data due tomorrow and Retail Sales Thursday. Following August’s riots and unexpected rise in Unemployment these figures will be watched carefully and we could see the pound lose some of the impressive recent gains, particularly those against the Euro. Exchange rates are moving every few seconds and can move for completely unexpected and unpredictable reasons. With over 4 cents gained on the Euro, 3 cents on the Aussie and nearly 5 cents lost on the US dollar (and all in the last few days!) we are looking at some very volatile trading conditions.

We are specialist currency traders who write this blog for the benefit of clients and members of the public. If you have any FX transactions to undertake why not speak to us to see if you could be getting a better deal? Feel free to contact the author direct on (+44) 1494 787 458 or alternatively e-mail jmw@currencies.co.uk Please quote PSF and JMW when making your enquiries.