Tag Archives: spainish bailout
Sterlings worrying forecast
Generally sterling has been gaining this week against most currencies, as regular readers will be aware, this is due to investors using the Pound as a safe haven for their cash. However GDP estimates fell yet again his week, June’s NIESR GDP forecasts fell back to -0.2% from +0.1% in May. This is now the fifth month this year, (out of six readings,) that has shown that the UK economy has contracted.
The Bank of England is well aware of the struggle which is why additional Quantitative Easing (QE) was announced last week, increasing the total target to £375 billion! Still, loose monetary policy seems to have proven ineffective around the globe and as a result I personally would not be surprised to see further QE being announced in the future. (QE is the printing of money, the theory is it makes banks lend more which increases growth, however as more money is created it value falls, normally QE weakens a currency.)
This is more of a long term worry for clients, in the shorter term I personally would not be surprsied to see GBPEUR climb further. So good news for buyer, but why?
Well this week has already been a busy week for the Euro as Financial ministers meet in Brussells for a 2 days meeting. The big news was that covered in yesterdays blog that Spain is receiving a “banking bailout,” but in my optition they are joinging the majority now that have had a bailout; Greece, Ireland, Portugal and Cyrpus. That is why we are where we are at a near 4 year high. The reason why I think there is more to come is due to comments make from italy. Their prime minister said that he would be open to also receive a support package to lower the countries borrowing. If this was confirmed I would think GBPEUR rates could push up to 1.30!!!!!!!
If you are in a position reading these blogs looking for the time to trade, I think it is very close! Now is the time to contact us if you need assistance…. Contact me personally by emailing me at hse@currencies.co.uk I look forward to hearing from you.
UK Retail Sales on the Rise as Eurozone Ministers Meet to Discuss Spain & Greece
Eurozone finance ministers were meeting today, to discuss a bailout for Spains banks and the future of Greece’s two rescue packages. The resolution of these issues is, in my opinioin, key to the long-term stability of the EU and the single currency. The markets have been dogged by uncertainty over recent months, as the economic stranglehold tightened around Europe and investors ran for cover as first Greece, then Portugal, Ireland, Italy and Spain were plunged into debt and their economies contracted, as unemployment rose and growth forecasts were cut.
What investors now need to see is a real fiscal startegy put in place, that will assist with long-term economic growth in the region, whilst finding the right balance with the necessary austerity measures. If this resolution can be found, then I do believe we could see the start of a euro fight back against both GBP and the USD. What to me has become very aparent is that all those waiting for 1.3o on GBP/EUR, should be prepared to be dissapointed.
GBP/EUR rates have pushed back through 1.24 this afternoon and at time of writing were sitting at 1.2427, up over a quater of a cent since the start of this mornings trading. This spike could well have had something to do with the release of todays UK retail sales, which showed an unexpexted rise of 1.4% in May. This increase has led to optimism here on our own shores that the retail sector may finally be ready to show some consistent improvement, which will ultimately be a huge boost to our economy and to sterling.
GBP has fallen off against the USD this afternoon, as the positive sentiment surroundiong Greece and Europe is seemingly having a knock on effect. Investors may well of seen the news as a reason to be hopeful that the global economy is picking up and that will entice them to be slightly riskier with their assets and move money away from the ‘safe haven’ dollar and into riskier currencies, that may provide the opportunity for higher yields.
If you have an upcoming currency requirement or would like to be kept up to date with all the latest market movements and key economic data, then please feel free to contact me directly at mtv@currencies.co.uk or on 01494 787 478.
