Will the Pound recover anytime soon?
Aside from some excellent buying euro rates sterling has had a poor start to the year falling against all majors. Sir Mervyn King, Governor of the Bank of England (BoE) underlined the challenges ahead last night calling the UK’s recovery ‘long, arduous and uneven’. Hinting at further Quantitative Easing (QE) and that interest rates will remain low Sir Mervyn laid blame on a global economy readjusting to the excesses of the past. We learned yesterday Public Sector Net Borrowing had fallen by £2.2bn in December, but that total borrowing in the current financial year was now at a record £1tn! This is despite the cuts and austerity undertaken since 2010. Such news combined with Unemployment at a 17 year high and the possibility of a UK already being in recession paints a rather grey picture for the pound. I cannot see any serious gains for the pound on the horizon, indeed things could well get worse this morning.
IMPORTANT DATAWATCH – UK GDP at -0.2% for Q4!
This news is disastrous for the UK and pound, we are moving backwards at a key stage of our recovery. Bank of England minutes from the latest policy meeting where we will learn how the members voted earlier in the month. Adam Posen, one of the policy makers for the BoE hinted on Monday more QE was ‘probable’ and Mervyn King echoed this last night. These two releases could easily trigger a sterling slide and I would not be surprised to see the pound suffer losing a couple of cents to both Euro and US Dollar, as well as other majors.
Sterling rates particularly against the Euro look very favourable at present. Our contract options allow you to forward book rates for up to two years and insert stops and limits into the market to make sure your exchange doesn’t become too expensive. We not only help secure the very best rates from the market, but work with you to make you aware of all the issues surrounding your trades so you can make an informed decision.
If you would like a full discussion of all the events surrounding your currency exchanges I will be happy to explain further what is happening and why. Just send an e-mail to [email protected] Ideally please include your name and telephone number so I can make contact to explain all your options.