Daily Archives: July 20, 2012
GBPEUR rates continue to climb up to 4 year highs of 1.28, but will it continue??
Well no one knows the answer to this but I personally would not be surprised to see it push up to 1.30. This is due to the continuing proof that the euro is falling as borrowing costs between the North and South widen further. The borrowing costs of France and Germany (Northern Europe) are close to 1.5%, while in Southern Europe, Spain, Portugal and Italy are continuing to climb up and over 7%. This is the fundamental reason why rates are continuing to climb, it is simply a massive concern for the Euro, in its current state the Euro is failing. Yes – they are making steps forward, Spain will probably get their bailout confirmed later today and Italy are rumoured to be close to going to the ECB with their hands out for more money, but the process takes too long and rates as a result will continue to climb as a result, in my opinion.
We all know the Pound is doing well against the Euro, but that does not mean the UK economy is actually performing well. I think we can all see the effect on the high street, it was again confirmed today that things are not improving as the UK government borrowed more money last month than expected pushing our total borrowed to over £1 trillion again!
So when do you trade if you are buying this coming week?
Honestly, I would hold out and continue to watch the rates. We are entering the volatile time of the month with little economic data, resulting in markets being driven by both demand and expectation. Use your broker to help you time the transfer to try and get the most out of your trade. For example I have a number of clients that were waiting for the next high. That came yesterday afternoon and I managed to help
90% of my clients which were ready to take advantage.
Saying all that, if I had told you we would be this high in January or even May I don’t think you would have believed me! So make sure to take stock and re-calculate how much you are willing to lose if rates start falling back!
If you would like a more personal discussion about your situation feel free to contact me, Steve Eakins on 01494 787 478 or via email me directly at email@example.com