Over the last few days Europe has continued its slow steady steps to a recovery. At the Financial meeting which is taking place in Brussels yesterday and today we have already had confirmation and details of the Spanish bailout. Even though this has not been called a bailout if you look at what has happened it really is; banks have been given money, the country has had extensions in its repayment plan and extensions to hit its deficit budget. Their next payment has been confirmed to be €30 billion at the end of the month. The markets thoughts on this is that we have only started the bailout of Spain and in the past it has taken 2 or 3 attempts to get it right if you look at both Greece and Ireland. Plus we have to consider that Italy is not far away either, bond markets showed this lack of confidence again yesterday as Spanish bonds go over 7% and over 6% in Italy.
So currently GBPEUR exchange rates are near a 4 year high and if I was buying I would probably hold out, if I was selling euros and buying pounds and I had not already done the trade I would have done it yesterday. Currently it looks like the markets may only go one way.
Other members of the team here however have a different view, that is valued and you should consider. Their argument is that we have actually seen sterling lose ground against most currencies other than the Euro. They highlight the recent date coming out of the UK as a warning that rates could swing dramatically in the other direction. Highlighted especially is the poor Construction figures which showed a 2 ½ year low plus the comments by mervyn King, the governor of the Bank of England, that thinks we are only half way through the hard times, meaning the UK could continue to suffer for the next 2-4 years!
Either way, if you are looking at completing a transfer make sure you know what you are gambling. Sit down and do the maths working out how much each cent costs you and remember how long it takes to not just earn but save the potential loss. If you are uncomfortable with the figure you end up with I would strongly suggest you look at avoiding the risk and buying your funds sooner rather than later. Alternatively you can easily change the parameters by changing half.
Markets are still moving over a 1% a day so timing will be key. Keep a watchful eye on the rates and if you need assistance or would like to put a professional strategy together contact us today for a brief chat as we have many options available inclusive of a forward contract, stop loss or limit order all of which are free and great tools to use in a volatile market. You can contact me directly by email at [email protected] and will be happy to fully explain how these work.