GBPEUR has not really found its feet so far this year and I see no reason this uncertainty won’t continue! Movements over 1% in a day have not been surprising and looking ahead I feel is only bound to continue. Since the start of the year buying €200,000 has become £12,115.40 more expensive.
With the possibility of triple dip recessions, the UK leaving the EU and confidence largely returning in Europe it is likely this current bad run for sterling, particularly against the USD and Euro, is far from over. The CBI (Confederation of British Industry) has this morning predicted the UK will actually avoid a triple dip recession but I fear snow and flooding last month has had a negative impact so far this quarter on economic growth. To me it looks like the pound will only continue to suffer and things could very easily get worse. Have you made provisions for further movement?
This morning we have the Bank of England Quarterly Inflation Report. Historically BoE Governor Mervyn King speaking is GBP negative and I would not be surprised to see the pound suffer this morning due to further negative news surrounding the UK economy. If you are considering any transfers involving the pound you can speak direct to the trading floor on 01494 787 478 or make a direct enquiry with me at email@example.com
Currency Wars – Race to Growth!
The G7 stated yesterday it was concerned about excessive JPY movements and that markets only must set exchange rates. Mario Draghi countered claims from last week that the ECB may intervene to artificially weaken the Euro to help exports in the Eurozone. This helped the Euro to strengthen in the afternoon and contributed to another day of volatile trading.
When an economy is not growing there are limited options to stimulate growth. One is to spend more to get the economy growing which in these austere times is unpopular. Another option is to artificially weaken the currency which serves to increase the competitiveness of the nation’s exporters and help drive the recovery.
There is currently much speculation about the extent to which major economies are engaging in this practice. Whether it is intentional or just a product of these increasingly interesting economic times we are living in, it is creating volatility on rates. Why not ask about our Market Watch service to help limit your exposure? Speak to me on (+44) 01494 787 478 or make a direct enquiry with me at firstname.lastname@example.org
GBPUSD ‘Cable’ Forecast: Will the USD weaken?
Yesterday the US dollar touched a 6 month high against the pound presenting the best time since August to sell USD for GBP. Cable has been slowly ebbing down in the last few weeks although significant further USD moves look limited since risk appetite is still fairly high. Investors have confidence as evidenced by the excellent performance of stocks and shares this year. The poor performance of the pound looks likely to the main drag on this rate and I expect we will see rates in the mid 1.50’s for the
rest of the week.
The State of the Union speech by Obama last night helped to further fuel this confidence with his pledge to increase employment via increased capital spending and the introduction of a minimum wage. To me it looks like America will continue to spend its way to growth which does raise interesting questions over the debt ceiling talks due in May. Looking slightly further ahead the uncertainty this presents could result in a reversal of the current risk appetite and see GBPUSD head closer towards 1.50. If you are buying or selling US Dollars you can speak direct to the trading floor on (+44) 01494 787 478 or directly email me at email@example.com
DATAWATCH – US Retail Sales 13.30 – US economic data has been fairly mixed lately so this could easily affect movements in the afternoon.
Important Eurozone News to affect Euro rates
Tomorrow we have Eurozone GDP which is predicted to affirm the Eurozone in recession. On the face of it, this appears to be good news for anyone buying Euros but do not be misled. The dire straits of the Eurozone are well known to investors and bad news will not be a huge shock. If you are buying Euros with pounds this release could provide the opportunity you need to get a little more on the rate but it could easily help the Euro if it is better news. Our personal proactive service aims to manage your risk
GBPAUD Forecast The prospect of an interest rate cut in Australia is preventing a significant strengthening of the Australian Dollar although the poor performance of the pound is dragging the rate down. On balance I expect the GBPAUD rate to decline back towards the 1.50 mark and cannot see any immediate return to the rates of 1.60 and above.
Markets often move ahead of the event so the best way to ensure you don’t suffer is to speak to your personal account manager here or if you don’t have one, open a free, no obligation trading facility by clicking here. The careful use of one of our contracts will ensure you do not lose out. For further information feel free to contact me directly on firstname.lastname@example.org