Daily Archives: August 8, 2012
Sterling exchange rates fell to a one month low against the Euro on Tuesday and rates have now fallen 2.25% in just over a week (a difference of €5,600 on a £200k money transfer). This shows how important itis to keep in close contact with your currency broker as the money markets are notoriously volatile – but why has the Euro strengthened?
Many may be a little confused as to why the Euro has strengthened with some expecting London 2012 to have given a much needed boost to the UK (of course this may well do in weeks to come) however short term the prospects within the UK are still looking bleak. Further indications of this were shown as the NIESR (National Institute of Economic and Social Research a well-respected think tank) released their latest GDP estimate. Historically these estimates are very accurate and again it was to show a -0.2% contraction. This, along with Mario Draghi’s (the head of the ECB) confirming just last week he would do ‘whatever it takes to support the euro’ has led to the recent moves and a drive in favour of the Euro.
The fact the pound is still trading at close to a four year high against the Euro means Euro buyers shouldn’t be too disheartened and with levels still above 1.25 GBP/EUR this still represents a good buy opportunity in my opinion. However if you are looking to secure Euros in the coming days then watch out for the Bank of England’s inflation report due for release today as the UKs growth forecast is expected to be cut to no growth for 2012 compared with 2% predicted a year ago.
The report (released at 10:30 BST) will give clear insight into the Banks thoughts and projections and may hint at its next moves in relation to monetary policy. Rumours have been growing that the BofE may consider cutting interest rates from the already record lows of 0.5% – good news for your mortgage but potentially bad news for the pound. Historically a rate cut reduces the demand for a currency and hence the price falls, therefore any indication of this may lead to a continuation of the recent trend and a move towards 1.24.
To discuss your options and the many different contracts we can offer, including the use of a forward contract (proving very popular in the current climate) where for a nominal deposit your rate can be fixed and guaranteed for up to one
year in advance.
Best exchange rates for cable
GBP/USD exchange rates or commonly known as cable (derived from the transatlantic cable linking the UK and US enabling messages with currency prices to be transmitted between the London and New York exchanges) has remained range bound between 1.55 – 1.57 the past week, a trend I feel may well continue. Again todays Bank of England inflation report could hit the pound and a move towards 1.55 seen if more QE or a rate cut is discussed, however overnight we had a speech from the Federal Reserve Chairman Ben Bernanke. In the press conference he gave little insight as to whether further QE would be implemented and as a result this morning we have seen the dollar strengthen already.
Canadian dollar exchange rates, as with many currencies, have recently been strengthening against the pound. We are currently sitting at 1.56, just 2 cents shy of the 52 week high. Recently the loonie (named after the common loon, a bird which is well known in Canada) has been closely tracking the moves of the USD and the two (USD/CAD) are currently sitting just shy of parity. With the US being Canada’s largest trade partner any moves from the US can directly impact the CAD and with Bernanke’s speech painting a mixed outlook for the US economy this may cause a slight weakening of the CAD in the coming weeks. For anyone with a shorter term requirement we have Canadian unemployment figures released on= Thursday. Figures are expected to show a small increase and this may create a small window of opportunity for CAD buyers, contact your broker to make secure you secure the best exchange for your dollars.
What now for the AUD?
The Aussie is continuing its assault on the currency markets just shy of reaching record highs against the pound and euro and with little signs of stopping. Should you need to buy AUD watch out for Australian unemployment figures on Thursday. As with Canada, figures are expected to show unemployment rising and therefore could create a short term buy opportunity for those in a position to take advantage.
To discuss my opinions and any upcoming currency transfer you may have then please contact Mike on email@example.com or call 01494 787478. As a specialist curency broker we have a number of tools available to maximise your currency exchange and in this volaitile market it is important to have up do date market insight and knowledge to maximise your currency exchange.