The month of July has seen some teriffic buying opportunities for Euros. Yes the rate is not as high as it was in 2007, yes the rate has been higher this year, but you have to look at current levels in the correct context to understand why they are attractive.
The reason rates are so low historically is that the economy in the UK (and consequently the pound, since the economic state of the UK to a large extent reflects the value of the pound) is fairing pretty badly. Interest rates are at an all time low. This is important because higher interest rates attract investment. The more investment a currency receives, the stronger it will be! Would you invest your money in a currency (or country) that has question marks for the future?
The UK also has very high levels of public and private debt which is a weight around ours and the country’s necks. We no longer have the strong manufacturing base that has guided us through previous recoveries and the range of austerity measures employed by the government looks like it could be crippling growth.
Following the short term resolution in the Eurozone debt crisis last week, the euro has strengthened. Tomorrow sees the release of UK GDP figures (revision 1 for Q2) which I expect will show a fall in the rate of growth for the UK. The euro crisis hitting the headlines earlier this month allowed the interbank level to go from 1.10252 to 1.14661 and despite the poor GDP predictions for tomorrow and last week’s emergency Greek funding the interbank is still favourable at 1.13232.
We therefore have 67% of the gains made this month remaining. Why get caught out gambling on exchange rates? We are specialist currency brokers who have won awards for our rates and can assist both private and commerical clients manage and limit their FX exposure. Don’t believe me? A recent independent survey reported in both The Independent and Yahoo Finance showed we were offering the best rates!
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