Daily Archives: February 8, 2012

Resolution for Greece looms but what will happen with the Euro against the Pound and US Dollar

Today was one of the busiest days on the trading floor this year and mainly due to the big decline in sterling exchange rates. When there is major movements in rates that is when we are at our busiest either helping clients decide to capitalise on a gain or stop their loss. The pound took a big
hit against nearly every major currency the day before the big interest rate decision in the UK & Euro Zone. All our regular readers will be well aware of what may occur tomorrow should the Bank of England initiate any further QE. The decision is at 12pm tomorrow so please keep in close contact with us so we can be your eyes and ears on the market.

Just as things had looked like getting better for the pound against the Euro spiking at 1.2098 a couple of days ago, sterling has crashed down to 1.1920 today. Euro exchange rates spiked against most major currencies bringing back better opportunities to sell your Euros to buy GBP or USD. We have been looking at events in Greece for days now wondering if they will find a resolution to cut their spending to the tune of 3 billion Euros which will enable them to get the desperatelyneeded bailout funds they require.

It seems that Greece has finally agreed to the austerity cuts but what will happen with Euro exchange rates? The issues in Europe are far from being over. To many countries are in too deep but this latest resolution will probably strengthen the Euro against a range of currencies in the very
near term. I do not see long term Euro strength and we may see the pound weaken to 1.17/1.18ish over the course of the next week and the USD to weaken to 1.34. I would then expect to see the Euro weaken to levels of 1.20+ against the pound and dip back below 1.30 against the USD.

If you are selling Euros to buy any major currency you may find that today’s agreement may bring that small glimmer of light for you to achieve that little bit more than what has been available over the last two months. Don’t let this opportunity pass you by. Feel free to contact me at bma@currencies.co.uk and we can look at your personal situation and see what options may be suited to your circumstances. In terms of the rate we will offer you please compare what we can offer you to your bank. We will do our upmost to make you a significant saving over your high street bank. Please call us to get a comparison rate.

 

What will happen to the Pound against the Euro, Dollar, Australian Dollar, New Zealand Dollar, Canadian Dollar, South African Rand and Swiss Franc in the near future?

Key market mover this week:  BOE
Interest rate decision, further QE. On-going Greek debt agreement.

Important DataIf you are considering a trade soon, it’s worth being aware of:

Tomorrow 09:30am – A host of Manufacturing and Industrial Production
data
along with Trade balance figures for the U.K This may throw anything up,
production figures have not been too bad of late however as per usual with
the U.K as soon as things seem on the up we tend to get figures that come out
that knock us straight back down again, so be very wary of this one.

Tomorrow 12:00 – Bank of England Interest Rate Decision  No change in rates is
expected however there is continuing speculation regarding further
Quantitative Easing. Regular traders will be aware that any mention of QE
tends to weaken the Pound so should we see this tomorrow then we may see
Sterling weakness against all major currencies

 Tomorrow 12:45pm – European Central Bank Interest Rate decision There is a slight chance of a rate cut in the Eurozone tomorrow however most major analysts expect the
ECB to hold off for the time being. Key will be the press conference
following the speech which may suggest how the ECB are planning to attack the
crisis going forward.

On-going yet imminent: Greek debt agreement  Signs are this is now
close to being tied up and signed off, in past months whenever an
agreement/resolution (no matter how little I believe most think it will work)
is put into place, investor’s confidence in the Euro rises and in turn the
Euro tends to strengthen. By the sound of it the agreement may be finally
signed off on the weekend by Greek Parliament however anything may happen in
the meantime.

Below is a further outline of
recent trends and themes for some of our main currency pairs.

Market Overview 

GBPEUR

**Still close to 16 month
high buying euros**

It would not surprise me to see
the Euro make a minor fight back in the next week or so, I do not expect
major Euro strength however unless there is a rate cut in Europe then QE
for the Pound and some certainty on Greece may well give it a nudge in the
right direction.

GBPUSD

**2 month high for buying
Dollars**

This pairing has been a hard one
to predict of late, with all of the uncertainty for Greece one would expect
the USD to have gained ground however we have seen quite the opposite over
the past week or so. Personally I feel that the mention of no interest rate
hike until late 2014 will hold the Dollar back from major strength however
I still think it will get stronger again against the Pound in the next week
or so.
       GBPZAR

GBPAUD

GBPNZD

**27 year high for selling
AUD**

At present these perceived
‘riskier’ currencies are winning the battle and seemingly strengthening
with great ease. The AUD is breaking long term records, the NZD is closing
in on them and the ZAR has recovered back an awful long way. The main issue
is that this has happened during major uncertainty within Europe.
Uncertainty usually weakens such currencies so I would be a little wary
that when we do see potentially positive news for Europe and negative for
the U.K we could see all of these currencies strengthen further and the
Pound to get even lower against them, however anything can happen and
markets aren’t moving how they are supposed to at present!
GBP-CHF There is continuing speculation
that the SNB (Swiss National Bank) may move to devalue the Franc again soon
as rates are edging closer to the artificially pegged benchmark they set
against the Euro of 1.20. If this happens

For the best exchange
rates …
Contact me

Daniel
Wright
Associate DirectorForeign Currency Direct
djw@currencies.co.uk0800 328 5884 / +44 1494 725353

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