Sterling hits an 8 month high against the Euro but losses felt against the USD

GBP EUR Looks to Employment Figures for Support

Sterling exchange rate rose to an 8 month high today up to 1.1761 against the single currency. The issues in Europe notably Greece and now Italy are starting to spiral out of control. The costs of Italian bonds have risen to well above 7% this week and these sort of levels are completely unsustainable.

I feel that the pound will continue to slightly gain against the Euro but, against a host of other currencies most notably the USD, I think sterling could be in for a rough ride ahead. Every time that events inEuropeget worse the US Dollar gains in strength due to the flight to safety. This is what seems to have happened today.  

Reasons that the pound will fall too is that with the economic situation in theUKthings are still fairly stagnant. With low interest rates and continued austerity measures things are not looking great. Tomorrow is another interest rate decision in the UK and the Bank of England can easily start further rounds of asset purchases (Quantitative Easing), so I wouldn’t be surprised to see further sterling weakness as I am sure that MP’s and policy makers from the Bank of England are happy with a weak pound to help assist the few exports that we have.

Despite everything that is going on with the euro the pound is still not at the highs that we witnessed at the beginning of the year trading above 1.20 at certain times. In fact it is amazing how the Euro is still holding up so strong against a range of currencies. There are lots of commentators that feel the Euro will weaken further but they have been saying this for 2 years now. If there is an eventual break up of the Euro with a divide of northern and southern you should bear in mind that if your requirement is for countries like Greece & Italy you may see your pounds go a lot further in 2 years time. If you will require funds for countries like Germany & France then their new Euro could strengthen immensely and make that purchase even more expensive than now. This is obviously if we get a break up of the Euro.

Please email me at [email protected] and let me know what your opinion is on the future of the pound, Euro & US Dollar. If you would like information on how we can make you a saving on your exchange please let me know what your requirement is and we can have a chat about the options that are available to you going forward.