Yesterday I was posting that the Federal Reserve Bank of America’s testimony hearing with Congress were causing secondary effects on the currency markets. By repeatedly stating they would delay the rise of interest rates, the Euro gained ground lost against the Dollar, and this caused the Euro to also rise slightly against the Pound. This was a similar effect we were seeing at the start of trading this morning.
However, the testimonials took a sharp turn this morning. Inflation data released that morning about the US economy showed promising price increasing outside of the low energy prices. THe politicians, hoping to score some points by fighting for the (short term and irrational) goals of their constitutuents, used this to berate Janet Yellen, the head of the FED for deciding to delay interest rate rises.
In a world of weak global growth, raising interest rates would be a gamble on an economy still recovering. But a world of weak global growth is also full to the brim with investors waiting to jump at any opportunity for profit. The thought that the FED may be forced to raise interest rates saw money flood into the US economy from a battered Eurozone. This outflow of capital caused the new 7 year highs for Sterling Euro exchange rates seen today at the close of trading.
The same is still true, once the decision in Greece is ratified, the uncertainty holding down the value of the Euro will be lifted. While this delay will now likely limit the corrective pullback, I would not be surprised to see rates below 1.35 suddenly appear.
Those looking to buy Euros, ahead of the German ratification of the Greek bailout extension tomorrow, and want to save money on exchange rates compared to using your bank then contact me directly for a free quote on 01494 725 353 and ask for Joshua – [email protected]