As we head towards a much needed extended weekend break the pound is continuing its mini-recovery against the Euro moving nearly 5 cents in the last two weeks. This is bringing some unexpected respite for many and creating some good opportunities for Euro buyers. I do also feel those selling Euros should still look at the current levels as an opportunity. Taking a look back across the last two years trading the average price for GBP/EUR sits at 1.195 so you are still ahead of the game sitting at the 1.18 level and still some 7.5% better than the pre-Christmas 2012 levels.
For me this could be the start of prolonged recovery for the pound, particularly if the UK can avoid the triple dip recession. Recent data suggests it will be a close run thing but is certainly starting to look a little more optimistic for the UK with better than expected retail sales and public sector net borrowing figures from last week shining a brighter light on the UK’s slow road to recovery. I have been saying for some time how I couldn’t understand why the pound was so out of favour, particularly when compared to the Euro. For me it was inevitable that the European bubble would burst and those with an interest in the GBP/EUR pairing were possibly focusing to much on Sterling’s woes and forgetting the deep rooted problems facing the Euro zone. With Cyprus looking to agree terms to their €10bn bailout by imposing strict bank levies on deposits, this means in some cases holding up to 40% of individuals hard earned cash.
Some will argue that Cyprus has no choice, and in many ways they do not, but its sets a very dangerous precedent to the rest of Europe. Should this scenario spread to the rest of the euro zone then the knock on effects could be catastrophic and create a significant shift in investor confidence. This could cause a significant shift in GBP/EUR and EUR/USD exchange rates and you may also find a large shift from riskier currencies offering higher yields such as the AUD, NZD and ZAR. A major benefactor could be the USD and the ultimate loser the Euro. We are some way from this situation but I certainly feel opportunities will arise for those looking to buy Euros. Should you be selling however I would start to get a little concerned with the current trend and you may wish to explore your options.
When buying foreign currency it is important to give yourself the best opportunity to maximise your conversion. By using the services of a specialist foreign exchange brokerage this will give you the ability to take control of your currency requirement. This can be done through utilising one of the many contracts we have available such as spot/forward contracts and stop/loss or Limit orders. We will also aim to contact our clients as soon as a particular target rate has been achieved through our market rate alert service. To discuss the service we provide in full or to have me contact when a particular rate becomes available then please contact me at [email protected] giving a brief description of your particular requirement and target rates in mind and I will be sure to alert you if this price becomes available.
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