Pound Sterling Forecast

GBPEUR has been trading at between 8 cents and 18 cents better rates than the low of last year at 1.1052 due to debt problems in Europe. Is this likely to continue? Well the last two weeks have actually seen the rate start to fall as the UK recession was recorded to be deeper than thought and Mario Draghi announced that he and the ECB will do everything they can to preserve the Euro.

With the all important Interest Rate decision tomorrow for both the UK and the Eurozone, I think tomorrow will be key in shaping the more immediate movement on GBPEUR. If you would like more information about the exact measures we might expect from the European Central Bank please read my post here http://www.eurorateforecast.com/2012/07/30/key-data-and-events-to-beware-of-on-euro-exchange-rates-this-week-will-the-euro-strengthen/

I expect that the movement will probably provide a spike anyone selling Euros should be prepared to take advantage of since ultimately the problems in Europe are unlikely to be solved quickly. Also Germany’s Constitutional Court are still ruling on the legality of German participation in the ESM and Fiscal Pact. The concern is the use of taxpayer funds and how they are to be spent. I would not therefore be getting too excited, but it is important to note what may happen.

The Euro crisis is affecting all currencies

Draghi’s comments last week rocked markets by changing attitudes to risk by investors. Market sentiment is one of the biggest movers of exchange rates and Draghi’s comments caused the USD to weaken by nearly 3 cents in a matter of hours, as investors sold off safe haven positions. Stock Markets also rallied so this gives some indication of how much importance the comments had on the markets. This makes it highly likely we will see some kind of announcement and indeed movement on rates this Thursday.

USD – Tonight we have the Fed Meeting which could easily move the dollar. Recent talk of QE may be limited by not as bad as expected GDP figures last week, but this is an important release which could move the market. Friday we have US Non-Farm Payroll data which again could move the market so if you need to trade dollars buying or selling speak to us to find out how to get the best rates.

AUD – The Aussie continues to defy expectations and is touching an all time high against the pound. Will it break through these levels? Well despite uncertainty in Europe investors are confident in the Aussie because o f its strong economy and healthy lack of government and public debt. Compared to the rest of the World the Australian economy is the A star student of debt. It has very strong exports of raw materials and this keeps the economy buoyant. Some say it is too reliant on China but with high interest rates and a solid economic outlook, this currency continues to be bought. If you are looking to buy Aussies with sterling it is likely you will continue to face disappointment.

CAD - Just like the Aussie, the Loonie is retaining strength because the country has a healthy balance sheet, i.e it does not owe lots of money to the rest of the world. Coupled with very strong demand for its natural resources (Oil and Timber to name two) this is keeping the currency strong. If you are considering any CAD trades please feel free to speak to me in order to find out all of your options.

If you would like more information about getting the very best rates of exchange please feel free to contact me directly on jmw@currencies.co.uk or call me on 01494 787 478 quoting PSF. I will explain all of your options so that you can make an informed decision and trade at the very best rate of exchange.