Sterling crashes to a 15 month low against the Euro
Where next for sterling exchange rates against the Euro?
It seems like not much has changed for the pound over the last couple of years. In the UK all time low interest rates are not increasing, unemployment is not decreasing and the
austerity measures are now well underway. All Sterling negative.
Last year In Europe, the uncertainty of member states leaving the Euro asked questions in general about the collapse of the single currency. This really weighed heavily on the Euro, which enabled the pound to rise to the lofty heights of 1.2880.
This year the roles have reversed as comments from ECB (European Central Bank) have stated that there will not be a break up of the 16 nation zone plus Mario Draghi the president of the ECB stated that the ECB is ready to do whatever it takes to preserve the euro. This has increased investor confidence in the Euro and as they start to manage the crisis the currency is becoming more sought after and the more expensive it is becoming to buy. ALL EURO POSITIVE.
I fear that the losses for the pound could continue this month. Now that GBP/EUR has broken through the 1.15 point the next barrier of resistance could see a drop down to 1.13 so be cautious if you have an exchange to make. There are always peaks and troughs in the market so there will be windows of opportuinity to achieve slightly higher levels but I feel that 1.20 and above is an extremely long way away.
If you do have an up and coming currency requirements to make over the next few months you may be wise to get in contcat at [email protected] You can then benefit from our award winning rates and I will explain all the options that are available to you.
The Week ahead for sterling
The pounds trend remains negative on evidence that monetary policy conditions will remain loose throughout 2013. This Thursday will be the busiest day of the week as we have another key interest rate decision. Although there are no signs of any movement in the base rate you should be wary of any further monetary easing (QE) which
tends to weaken sterling. I personally feel that the Chancellor and the BoE are happy with a weak pound so any further signs of stimulus may just see sterling’s losses continue.
The latest PMI services-sector reading will be released tomorrow. This will be extremely important for confidence!! A sharp decline to 48.9 for December was only the second reading below 50 in over three years. Now a bounce back to above the 50 level this week would provide some degree of reassurance for the UK economy and suggest that a triple-dip recession can be avoided. However I feel this unlikely as the markets are expecting a reading of 49.5 which is still negative. If the level comes out worse than expected this could trigger serious alarm bells over the economy with a renewed plunge in Sterling. Expect GBP/USD to potentially weaken to 1.55.
We have different contract options like forward buying which can help you minimise your risk to volatile exchange rate fluctuations. This can give you the peace of mind that your funds will not weaken any more. If you would like more information on any of teh above email me with your requirement and contact details and I will make sure that you are aware of all teh options available to help you maximise your exchange. Just email me at [email protected]
Thank you for reading.