With the global economy at practically standstill, I believe European events in the next few days will be key to shaping the short and medium term movements of exchange rates not just on the Euro, but also the Pound, the Dollar and all majors. Two key decisions today could more specifically also help move GBPEUR, GBPUSD and EURUSD. An exceptionally volatile few months have cooled slightly this week, but I feel things could be pushed one way or another depending on the outcome of the European summits. If you have any transfers to make it is well worth considering the impact of these events. As specialist currency brokers we can help with tools designed to protect your exchange rate. Read on to find out more about what I think will happen and how we can help limit your exposure in these uncertain times.
12.00 BoE Interest Rate Decision – The Bank of England will today announce the outcome of their latest policy meeting. Whilst no change in interest rates is expected we could well see a further round of QE announced which could cause sterling weakness. If not this month, then it is likely in the New Year. Anyone looking to sell the Pound in the New Year should really be aware of the impact this could have, it may mean your transfer is much more expensive in the New Year than now. We can book current levels forward with a forward contract. I have really seen a rise in this type of contract this week, particularly on GBPEUR as we are so close to the 9 month high. Speak to us to find out more.
12.45 ECB Interest Rate Decision – The European Central Bank will then announce their decision. It is likely we will see an interest rate cut today which could well lead to Euro weakness. This could provide the perfect buying Euros opportunity, particularly if the outcome of the summit is Euro strength (and no QE is announced in the UK!). The markets may however have already priced in a cut in rates so any movement may be fairly limited.
Movement around this time is likely to be quite volatile as investors try to second guess decisions. If you have a transfer to make and would like to be kept up to date at this time speak to me today on firstname.lastname@example.org quoting GBPEURO and I can keep you posted.
We also have the ongoing events in Europe with European leaders meeting for another ‘key’ summit. This session could well go on into the weekend and I think the general theme on the markets will be in one of two directions:
Signs the Euro crisis will be tackled – If the markets receive well what the leaders are discussing we should see the Euro strengthen. Signs that the crisis is being tackled should also give rise to US Dollar weakness as investors move out to other riskier assets. We should also see a strengthening of the Kiwi, Rand, Aussie and also the Canadian Dollar. Anyone looking to sell one of these currencies to buy sterling may well wish to take advantage of any spikes against the pound at this time.
Signs the Euro crisis is not being tackled – If the markets do not receive well events in Europe a reverse of the above will likely happen. We will probably see the Euro weaken and the US Dollar stregthen as investors fears over the global economy cause a flight to safety. There will also be a knock on effect on the currencies mentioned above which will weaken as investors move to other assests like the Dollar.
The last six months have been a very difficult time for anyone making currency exchanges. The pound has rallied and fallen against all the majors as global events cause shock and panic. One of the major drivers on all exchange rates has been the Euro crisis and the possibility this will be tackled or not should cause a move in one direction or the other as stated above.
Of course there are no hard fast rules on the currency markets and anything can happen! If you have an upcoming transfer, even months ahead it may be of interest to speak to us to find out all your options. As well as booking today’s rates forward for future purchase we can also put orders into the market to trade at certain levels so your exchange doesn’t become more expensive than you had bargained for. Lookout for further updates and analysis on the site today and if you would like any specific information relating to the content on the site or your personal transfers feel free to e-mail me directly on email@example.com quoting GBPEURO.