What is around the corner?

GBPUSD Surges as Dollar Weakens Across the Board

What is just around the corner on exchange rates? Well it would appear that sterling is in line for further improvements as investors frustrations with the lack of progress with Greece and the inconsistency of US economic data persist. Don’t get me wrong the UK is hardly setting the world on fire and there is still the mammoth debt mountain to overcome, but at least the UK has control over its economic policies and the economy is growing. As so often is the case on exchange rates it is not a case of which is the best but which isn’t the worst! Below is a light summary on our most heavily traded and reported currencies, I hope you find the information useful. My name is Jonathan and I work as a specialist foreign exchange dealer assisting private individuals and business with their foreign exchange exposure. If you are buying or selling a foreign currency and wish for some useful insight and finding out if a better rate is possible please email me on jmw@currencies.co.uk

STERLING The pound has been performing well as economic data continues to show improvements in the Unemployment rate and growth in the all important service sector which comprises 75% of the UK economy and therefore UK GDP (Gross Domestic Product). With the UK election out of the way and a stable business friendly government in power the UK and the pound should continue to benefit from uncertainty elsewhere. The hallowed path back to raising interest rates is still rocky but recent Bank of England comments have suggested a rate hike as early as August. Sterling is up at multi year highs against most currencies so there are strong arguments to lock in these levels to remove the risk. If you need to sell or buy the pound and wish to learn of important events that will affect your exchange rate please call me on 01494 787 478 and ask to speak to Jonathan. Alternatively email me on jmw@currencies.co.uk

EURO The Euro has come unstuck this year as years of inaction over Greek debt issues finally catch up. I believe a deal will be struck but the uncertainty is weighing heavily on investors confidence and the Euro will struggle to make too much of a comeback. Greece will remain in the Euro but we probably won’t know exactly if this ‘deal’ will go ahead until next week. The Euro will of course rise once the deal is agreed but all Greece’s creditors are doing is postponing the problems for another day. If you need to sell Euros I would suggest moving sooner to get into a more stable currency like sterling to avoid the risk of further losses. The next few days are going to be vital for the Euro so if you are looking to buy or sell Euros please contact me to discuss and be kept up to date with the latest news.

US DOLLAR US GDP has shown the US  is struggling and despite strong improvements in the US labour market the expectations the US would be raising interest rates in 2015 are looking ever more uncertain. Further improvements or deteriorations in the US economy will be the key determinant in whether or not we actually see a rate hike this year, the Federal Reserve have confirmed this. Don’t forget the US dollar reacts to global uncertainty, if investors are worried about what is happening in the future they will buy dollars to ‘hedge’ against the uncertainty. There is correlation between USD strength and increased Greek uncertainty. If you need to buy or sell the USD I think it more likely the the dollar will be weaker in the future, particularly against a rising pound.

AUSTRALIAN DOLLAR The Aussie is likely to strengthen in the near term as it has weakened significantly in recent months which will undoubtedly have helped boost Australian exports. China is performing well and I expect once a Greek deal is finalised the Australian dollar will rise. Longer term we might see the Aussie weaken if they cut their base interest rate but Glenn Stevens  Governor of the Reserve Bank of Australia has recently stated slack in the economy will not be picked up by cutting further their base rate. I would expect a further rate cut perhaps towards the end of the year but suggest buying Aussies sooner particularly since the rate is so good at over 2 AUD per GBP!

NEW ZEALAND DOLLAR The Kiwi has weakened any may yet have further to fall with the currency experiencing a major sell off owing to lower demand for the currency following the rate cut to 3.25% earlier this month. With further easing on the cards by the Reserve Bank of New Zealand further falls seem likely. If you need to sell Kiwis I would suggest moving sooner as painful as it might be. Please contact me for more information on the timing of such transfers.

CANADIAN DOLLAR All the commodity currencies have been under pressure in the last few weeks, the CAD is no exception. On balance further CAD weakness seems probable as economic activity of their main trading partner the US slows and we also see Oil prices much lower in 2015 than previous years.

SOUTH AFRICAN RAND The Rand has weakened significantly as commodities suffer and political uncertainty continues to put pressure on the South African currency. Unfortunately any path back to strength for the Rand will be shortlived and if buying or selling this volatile currency I suggest making plans in advance.

What next? The pound is likely to rise further against most currencies as the scenarios above play out. Unfortunately there are never any guarantees on exchange rates and the only way to really know your price is to buy. The timing of when to do that is critical however and arming yourself with information is the best way to make an informed decision.

My name is Jonathan and as well as writing the blogs, have been quoted in national newspapers and helped thousands of clients with their foreign exchange payments. Whether moving overseas and making a one off payment or moving back to the UK making plans with your foreign exchange payments is key to getting the most for your money and making your life less stressful.

I am very confident I can offer some expertise and information to make your life easier plus save you some money in the process. For further information please contact me directly on jmw@currencies.co.uk