Currency summary for December

GBP EUR Exchange Rate: Weekly Review July 16  

Todays Currency Market

Today there are over a dozen economical reports from the UK which could make today one of the busiest day of the week on the FX market. The data includes UK Consumer Price IndexRetail figures, Production Price Index and BOE Quarterly Inflation report.  I personally would expect these releases to show either no change or a fall when compared to last month figures, as a result I think it is a lot more probable that we will see Sterling fall later today. Moving rates by as much as 1% making a €200,000 purchase £1,600 more expensive.

Italian news – GBPEUR rates

The European Union is coming to the end of the year with new fiscal rules for indebted states, a central bank bond-buying program, a permanent bailout fund and a roadmap for tighter banking and fiscal union. All of this positive news has helped the Euro reach the highest price for nearly 6 months.  However this has recently been overshadowed by news from Italian politics which could bring the Euro back down again.

Italian Prime Minister Mario Monti’s government looks like it is failing and this is adding concern that in 2013 it could fall into its fourth recession in a decade.  A coalition government will probably be created early next year with elections initially scheduled for February 15th. However if Monti does decide not to run for the top job again I think a large amount of confidence will be lost in the Italians financial ability. This could change the strength of the Euro in the oming weeks so story anyone with exposure to the single currency should keep an eye on this story. (To register for updates email [email protected].)

GBPUSD rates and GBPEUR due to Fiscal Cliff
On Monday UK House Price figures showing a fall of 3.3% in December however GBPUSD rates are still up close to a 2 month high.  The concern with regards to Cable prices (GBPUSD) all comes from the developments on the Fiscal Cliff story that we have discussed several times.

I expect to see GBPUSD rates increase as it looks more probable that a resolution to avoid the Fiscal cliff will be made. Any news that pushes back a potential resolution or even suggests that an agreement won’t be made should make the dollar more expensive.  The reason behind my forecasts are if commitment is made to invest, the US traders appetite for risk will probably increase, meaning assets will be sold in the dollar to invest in riskier currencies. This swing of demand for the dollar should result in significant changes in the price to buy the dollar.
Personally I expect a resolution to be found before Christmas so for GBPUSD rates to climb before the end of the year. Sellers as a result may wish to trade ASAP.

If you need any further information or would like to discuss your situation with an expert, feel free to contact us today. You can do that by calling on the normal number or emailing me on [email protected]

Thank you!

Steve Eakins

[email protected]