The Pound has performed well against both the EUR and USD of late, providing excellent buying opportunities for anyone holding Sterling. GBP/EUR rates have spiked back into the 1.19’s following Mario Draghi’s speech this morning, where he reaffirmed his earlier statement that Eurozone interest rates were likely to remain low for the foreseeable future. Many clients will now be anticipating that 1.20 will soon be available as a trading level and whilst the recent moves for GBP have been positive, I am still not convinced the current spike will go much further. We have already seen an improved run of economic data for the UK but whilst Mark Carney and the Bank of England (BoE) are committed to keeping interest rates low and our trade deficit remains as wide as it does, I feel any further positive moved will be handicapped. I do not believe the BoE will want rates to go much higher in the fear we will alienate our largest trade partners (Eurozone) even more.
Key data for anyone with a GBP/EUR requirement is this Wednesday’s BoE minutes, where we will have an insight into their latest meeting and whether we are likely to see further Quantitative Easing in the near future. Any indication that further QE is likely could cause the Pound to lose market value against the major currencies.
GBP/USD rates have also improved and rates have spiked towards 1.60. With the main focus in the US on Wednesdays interest rate and QE decisions, anyone with a GBP/USD requirement needs to keep a close eye on news reports this week. We may find the markets start to factor in the anticipated results and any fluctuation will cause additional market volatility. Personally I think if the FED decide to slowdown or ‘taper’ their QE programme as has been widely discussed, then I think we will see the USD strengthen against GBP and the EUR as the markets will view this as a positive for the UK economy.
The currency markets can be a difficult place to navigate but here at Pound Sterling Forecast we have over 13 years experience in helping to achieve our clients the best exchange rates on offer, whilst also providing them with the key market analysis required so that they can time their trade to perfection and maximise the market value. If you would like to be kept up to date with all the latest market movements, or just want to compare our exchange rates with your current provider then please don’t hesitate to contact me directly at [email protected], or call one of the team on 0044 1494 787 478.