The UK economy received a welcome boost, as the ONS (office of national statistics) announced that the UK economy had contracted by less than first thought in the second quarter of this year. The official figures show a contraction of 0.4%, rather than the initial estimation of 0.7% and this will certainly please UK leaders, as the fight to pull ourselves out of recession continues. Sterling has seen further gains against the euro during Thursday’s trading, as fears over Spain and Greece continue to weigh heavily on investors minds.
We also had further developments in Spain as leaders laid out their austerity budget for 2013, which included new spending cuts amid a shrinking economy and 25% unemployment. These problems, coupled with the on-going uncertainty with Greece is hampering the EUR chances of gaining ground against GBP. The image of Greek protesters is an all too familiar sight and brings about a serious case of deja vu to this particular analyst. These scenes are very reminiscent of six months ago, when the eurozone debt crisis was gathering a head of steam and media reports about the collapse of the euro were rife. Since then we have seen multiple bailouts, commitment to the country by a variety of key European figureheads and promises from a new government to bring about the necessary austerity measures to keep Greece in the eurozone.
The question now is whether the issues facing Spain and Greece have been factored into the market movements over the past few days? Mario Draghi’s recent commitment to Greece and the euro with his ‘unlimited’ bond buying scheme, in essence should help to protect the eurozone against these kind of future fall-outs. However, this scheme has yet to be put into effect and as such I will remain sceptical until proven otherwise. GBP/EUR rates continue to float around 1.26, as the markets try to digest the outcome of these recent developments.
This market uncertainty can be difficult to digest, especially if you have an upcoming property purchase or sale and are looking to transfer funds but are worried that market movements will ultimately leave you short changed. Here at Foreign Currency Direct plc we have multiple contract types all tailored specifically towards our client’s needs. One of our most popular types is our forward contract, which allows you to lock in an exchange rate even if you do not have the full funds available. This is perfect for anyone looking to eliminate risk from the market but still take advantage of our award winning rates. If you would like more information please contact me directly at [email protected] or on 01494 787 478.