An exceptionally impressive run for sterling could now be about to come under threat from any not so impressive data and attention being drawn elsewhere. Exchange rates move according to sentiment and rumour as much as fact and the impressive tones for sterling must be seen in the context of the dire sterling news we had been used to for most of the year. The rise in sterling can be mainly attributed to expectations interest rates will raised ahead of the banks own forecast of 2016. Betting against a central bank can prove costly!
“Each year there are a few events that cause exchange rates to move dramatically in a short space of time providing excellent opportunities for buyers and sellers who have made proper preparations”
What is next?
Market attention tomorrow will initially look to the UK Bank of England Minutes at 09.30 before the all important Federal Reserve Bank decision at 1900 hrs UK time. This decision on any extent to which QE will be withdrawn will affect not just the US dollar but also the Euro, AUD, CAD, NZD, ZAR and many others. Rate movements of up to 3 or 4 cents in a short space of time should not be discounted as investors move funds to fall in line with where they think rates and economic policy will head in the future.
Each year there are a few events that cause exchange rates to move dramatically in a short space of time providing excellent opportunities for buyers and sellers who have made proper preparations, Tomorrow night could be such a time and we may see market movements for the next few weeks and months determined by this activity. Utilising a stop loss or limit order is the best way to capitalise in such a scenario! This guarantees your rate even if the market touches your price for a only a second.
To discuss strategies to maximise your currency purchase please speak to me on [email protected] for more information.
US Economic Policies have global ramifications
US Quantitative Easing has been keeping global confidence high but the withdrawal or reduction has the propensity to sap confidence in the market. This would cause ‘riskier’ assets like the Kiwi, Australian dollar, Canadian dollar and Rand to be sold off. The key question is ‘will they taper’ and ‘by how much’. I think a cut of $10bn is realistic. This is at the lower end of expectations but a couple of not so impressive data releases from the US (on jobs and retail sales) may limit the initial higher expectations of a cut of up to $20bn.
Currency strategies to maximise your rate
Plan for the worse, hope for the best! That is always the best way to approach such decisions. Since no one can tell you exactly what will happen, an awareness of all of the facts and a quick review of your personal circumstance is the best way to approach the decision. Depending on which currency pair you are involved with will determine what may be the best course of action. If you are planning an exchange soon (even if just a one off) our service is designed to save people money on the actual rate as well as offer assistance with the timing of the exchange. Please contact me Jonathan on [email protected] for information on what may be best for you.
If you are selling a foreign currency to buy sterling it may be worth holding off slightly at present as further major sterling gains look limited in the absence of significantly better economic news. This will of course depend on which currency you are selling, again please contact me directly for the detailed forecast on your situation.
GBPEUR & GBPUSD is a 9 month high, GBPAUD is close to 3 year highs. To ensure you really are getting the best exchange rate and discover all of your options on moving money internationally please make contact with us. You can speak with me Jonathan by calling 01494 787 478 or email me directly too on [email protected]
Hope to hear from you soon!