Sterlings worrying forecast

Generally sterling has been gaining this week against most currencies, as regular readers will be aware, this is due to investors using the Pound as a safe haven for their cash. However GDP estimates fell yet again his week, June’s NIESR GDP forecasts fell back to -0.2% from +0.1% in May. This is now the fifth month this year, (out of six readings,) that has shown that the UK economy has contracted.

The Bank of England is well aware of the struggle which is why additional Quantitative Easing (QE) was announced last week, increasing the total target to £375 billion! Still, loose monetary policy seems to have proven ineffective around the globe and as a result I personally would not be surprised to see further QE being announced in the future.  (QE is the printing of money, the theory is it makes banks lend more which increases growth, however as more money is created it value falls, normally QE weakens a currency.)

This is more of a long term worry for clients, in the shorter term I personally would not be surprsied to see GBPEUR climb further. So good news for buyer, but why?

Well this week has already been a busy week for the Euro as Financial ministers meet in Brussells for a 2 days meeting. The big news was that covered in yesterdays blog that Spain is receiving a “banking bailout,” but in my optition they are joinging the majority now that have had a bailout; Greece, Ireland, Portugal and Cyrpus. That is why we are where we are at a near 4 year high. The reason why I think there is more to come is due to comments make from italy. Their prime minister said that he would be open to also receive a support package to lower the countries borrowing.  If this was confirmed I would think GBPEUR rates could push up to 1.30!!!!!!!

If you are in a position reading these blogs looking for the time to trade, I think it is very close! Now is the time to contact us if you need assistance….  Contact me personally by emailing me at [email protected] I look forward to hearing from you.