If you need to buy or sell Sterling, Euros or US Dollars then this week’s interest rate decisions may decide the trend in the lead up to the New Year.

GBPEUR rate remains steady as markets await the Autumn Budget

Good morning readers,

With two huge rate decisions for the UK and Eurozone this Thursday there could be quite a lot of volatility for sterling exchange rates over the course of this week. I have had many clients recently asking me what is going to happen with the pound against a range of currencies. The truthful answer is that with all the uncertainty surrounding the global economy and notably Europe it is very hard to exactly pinpoint where sterling exchange rates will be trading early next year.

Firstly we have to look at this week. With France and Germany recently meeting and another summit due on Friday week many analysts are stating that it is crunch time for Europe and if no resolution is found then the unthinkable could be around the corner. The pound has gained against the single currency today after Standard & Poor the credit rating agency has put 15 euro-area nations on watch for potential rating downgrades. The news of this is nothing new but we could be asking S&P if they could time there comments better. Every time EU leaders are trying  to resolve things the credit rating agencies come out with major doom and gloom comments and markets across the globe falter again. This morning’s GDP figures for the Eurozone has shown signs of slight growth for the region but as the data came out exactly as expected we have not seen any major movements from this.

I feel the interest rate decisions on Thursday will be key to how things develop for the rest of December. There are different outcomes that could affect the pound and Euro against a range of major currencies. There is a possibility that the European central bank (ECB) could cut rates as they did last month. If this were to happen then I think the Euro could seriously weaken. If you are worried about this outcome and you have Euros to sell you may be prudent to act well before this decision. Email me at bma@currencies.co.uk with your details and I will call you to discuss the options that are available to you.  If the ECB keep rates on hold then I cannot see the Euro gaining and will more than likely be fairly stable.

In the UK we are expecting the base rate of interest to stay on hold as it has for some time now. The biggest concern with those that need to sell the pound will be if the Bank of England’s Monetary policy committee issue another round of Quantitative easing. There have been rumours that this may be the case as it is the only way that they have had of trying to stimulate the economy. I feel that this could hamper the pound further against currencies like the USD, AUD, CAD, NZD, CHF & ZAR. We have already seen a big decline in the value of sterling against these currencies recently and if you need to buy these currencies before the New Year then I will be happy to speak with you to discuss timing and the options that are available to you. Email me at bma@currencies.co.uk to discuss your requirement and how we can make ultimately make you a saving on your exchange over the high street bank.

My biggest concern for the pound going forward though is all the doom and gloom surrounding the UK economy. It has all been highlighted recently with weak UK retail sales by the BRC and housing market survey by Halifax has highlighted the fragile state of the UK economy. There is a lot of pessimism surrounding the UK and the pound and let’s hope that the start of 2012 does not begin the way this year did with losses for sterling.

I would love to hear your opinion on what you feel will happen with the pound, euro and events in Europe. Please email me bma@currencies.co.uk and I will come back to you with how we can help you make significant savings on your currency exchange.