Daily Archives: November 1, 2011
Why is the Euro getting weaker and the pound getting stronger?
Wow, what a day on the markets so far and one hell of an interesting week ahead!
If you are looking to buy Euros at present then you need to thank the Greeks for making that purchase overseas much cheaper in the last 24 hours. It has been nothing short of madness the way they have been messing around and it has certainly not done the Euro any good as uncertainty once again looms over an already jittery currency market.
Couple that with the fact that the Japanese devalued their currency in the early hours of Monday and it is plain to see a lot of money has been made and indeed lost in the past 48 hours.
Personally, I think that the rates may have a little further to go up however the pattern of the year is Sterling taking a few steps forward and then getting knocked straight back down again so you need to be really wary and be prepared to take advantage of the great gains we have already seen.
Nobody appears to know where to stick their money… the Swiss and Japanese are devaluing the currency, the Eurozone is in all kinds of trouble, the U.S aren’t exactly in great form but the U.K is slowly becoming an option for the perceived ‘safer haven’ as we still have our AAA credit rating at present and GDP figures actually came out better than expected today!
If you have an upcomin g requirement please feel free to comtact me directly djw@currencies.co.uk and I will be more than happy to assist you in getting the best rate of exchange and a fantastic service too.
The UK eagerly awaits the GDP figures for Q3. What will happen to sterling during the release?
Sterling exchange rates strengthened against all of the major currencies bar the USD yesterday on a day that saw wide swings in global foreign exchange markets. Stock markets around the globe weakened once again on fears over Europe and the Japanese government intervened to weaken their currency to help boost exports which caused major volatility for the 16 most traded currencies.
The trading session started fairly static for the pound in early trading but as the day’s trading session progressed the pound reached the dizzy heights of a 2 month high against the YEN and spiked to a fresh 3 week high against the Euro.
This morning we will have the release of the UK Gross domestic product. This is a measure of how the UK economy is performing in total. It can create big swings for the pound in and around the release and this morning’s release will surely not be different. The Office for National Statistics is expected to say that GDP increased by 0.3% between July and September. It would be a modest improvement on the second quarter, when economic growth was fairly flat at just 0.1%.
The improvement may sound good but it would still represent very weak growth and would not change the picture of a very lacklustre recovery for the UK. The markets may be more interested in Q4 GDP as this will be an indicator as to how the economy performed after Quantitative easing was introduced last month.
This last week Bank of England policymakers Martin Weale and Paul Fisher have both warned that the impact of the euro zone debt crisis could mean the UK economy is now contracting and Fisher warned there was a “significant” chance of another recession.
If the actual levels come out weaker than forecasted then we could see the pound slip back from the gains that we witnessed yesterday against a host of currencies. This could put pressure on the pound as the fears of a double dip recession will gather pace once more. The release is out at 9.30 this morning and please email me directly at bma@currencies.co.uk so we can discuss your requirements and all the options that are available to you.
Below is my prediction for today’s trading session.
Up against EUR, AUD, NZD & ZAR
Down against USD & CAD
