The pound The start of the year was marred by double dip recession which we only came out of in Q3. The risks of a triple dip recession are high as is the threat of the UK being downgraded from its prestigious triple A credit rating. Whilst this has kept the pound weak against most currencies, against the Euro and USD sterling has strengthened to very favourable levels this year. Unfortunately the fragile nature of the UK recovery and economic outlook mean anytime favourable levels are seen, they do not usually last long and I expect to be a feature of rates in 2013. Forward contracts are an excellent way to protect yourself from these unpredictable swings.
I expect the issue of growth to become even more important politically and put more pressure on the Chancellor George Osborn to do more to stimulate growth. In the short term this will probably mean more QE by the Bank of England which will also keep the pound weak.
On the bright side the UK is recognised internationally for at least trying to tackle its debt problems and sterling is a haven for foreign investors. Longer term this should stand the pound in good stead but this is unlikely to be reflected in the rate for perhaps many years. 2013 looks set to be another year of uncertainty for sterling. For a detailed forecast relating to your transfer please contact me directly.
Another year of the Eurozone in the headlines. Investors and the world were almost taken to the brink in the summer as interest rate cuts and elections threatened to undermine confidence. High expectations Greece would be forced to leave were quashed by central bank President Mario Draghi. His statement of intent to do ‘whatever it takes’ to ‘preserve’ the euro filled markets with confidence and the euro clawed back lost ground against all currencies.
You would struggle to find anyone who felt that these statements marked an end of the euro crisis however. It is perhaps fair to say the worst case scenarios painted can for the time being, be ruled out but political uncertainty and depressed economies do signal further problems ahead in 2013. The euro crisis is the big story of our generation and it is impossible to say exactly what will happen. It is likely that the euro will remain weak against the dollar and sterling due to the poor performance of the Eurozone economy compared to the economies of these currencies. If you are buying or selling Euros for any other currency you can speak to me for the best rates and a full discussion of how we can limit your exposure.
If you would like more information on any subject please let me know personally, Jonathan Watson [email protected], 01494 787 478