Euro Budget Deal and Impact On Sterling Exchange Rates

Pound to US Dollar rates influenced by political uncertainty in the UK

In recent times Europe has been focused on the issue surrounding Greece’s debt after extending their bailout period by 2 years. This means that a hole of €15bn has been created which Euro zone leaders are deciding how to fill over the next week. At the meeting in Brussels the focus is now on what amount will be provided for Europe’s budget during the period of 2014-2020. The figure discussed is €1.1trn and under close scrutiny for anyone with Sterling exchange rates in mind will be how much the UK will commit to Europe. In many of the previous meetings they have ended with unresolved issues so I think this particular meeting will also drag on longer than expected. For more up to date information as to how this may affect exchange rates please email me directly Tom Holian [email protected]

It is now only 5 weeks before the US fiscal cliff deadline so markets are holding their breath to see if Obama can come to an arrangement with Congress. Taxes are due to rise and spending cuts are likely to occur so if you need to transfer US Dollars over the next few weeks it may be worth looking to do something soon as my prediction is that the US will sort out its fiscal policy and once confirmed we could see Dollar strength as the markets settle down.

Moving the focus to down under recent news about the IMF proposing the Australian Dollar as a reserve currency we have seen a strengthening against USD, EUR & GBP. However, in a recent article Morgan Stanley has suggested that the Aussie could be under pressure next year as China moves away from ‘commodity-intensive consumption’ which would curb demand for commodities in Australia’s mining industry. The western part of the country has been the real driving force behind the strength of the AUD and its relationship with China so if demand decreases we could see a weakening of the AUD therefore possibly providing some better buying opportunities for GBPAUD exchange rates in the future.

For more detailed information about Australian Dollar exchange rates feel free to follow our sister blog or get in touch with me directly via email Tom Holian [email protected]