Are we Witnessing the Calm Before the Storm? (Matthew Vassallo)

Pound to Dollar Rate Drops to One-month Low

Thursday has seen a relatively flat day for the GBP/EUR currency pair, as the markets seem to be waiting for the next significant move either in Europe or the UK. The pound has struggled to make any inroads today, despite a drop in UK unemployment and today’s announcement that retail sale figures were up in September. Both of these would usually be viewed as a positive for Sterling but whilst our growth forecasts remain weak, it is difficult for the Pound to make any significant moves back towards the four year highs we witnessed in the summer.

Personally I think this is the calm before the storm, with a significant move likely sooner rather than later. This could be towards 1.22 if GBP continues to come under pressure, or back through 1.24 if economic problems in Europe deepen. I can’t imagine it will be long before Spain finally receive the bailout we are all expecting but how this will affect the eurozone and the GBP/EUR currency pair is difficult to say. In my opinion it is highly dependent on whether Spain can keep their borrowing costs down. Low interest will make the bailout repayments more manageable, whilst higher yields will do the opposite.

This market uncertainty can be difficult to digest, especially if you have an upcoming property purchase or sale and are looking to transfer funds but are worried that market movements will ultimately leave you short changed. Here at Foreign Currency Direct plc we have multiple contract types all tailored specifically towards our client’s needs. One of our most popular types is our forward contract, which allows you to lock in an exchange rate even if you do not have the full funds available. This is perfect for anyone looking to eliminate risk from the market but still take advantage of our award winning rates. If you would like more information please contact me directly at [email protected] or on 01494 787 478.