Good Morning readers,
So with events in Europe still no nearer with a resolution for Greece cutting its debt a think tank in the UK has stated that a Eurozone meltdown would plunge Britain back into a two-year recession and send unemployment soaring above 10% This came out from the Institute for Fiscal Studies (IFS)
As unlikely it is that we should see a complete break up and failure of Europe it is a stark reminder of the close ties that the UK has with Europe and no other country in the world would be harmed more than this occurring. This is probably the main reason that sterling exchange rates have not strengthened against the Euro by as much as some other major currencies.
The next year or so will be very interesting to see how things pan out but I would expect to see the pound trading from as low as about 1.1450-1.23 over the course of this year. The pound is up trading at 1.2050 at the moment after increasing this week from a low of 1.1899. It goes to show how quickly things can move on the markets.
We just had UK PMI data out for the construction industry and figures came in well below expectation but the markets have not really moved on the back of it. Plus this morning there has been billions of Euros of French and Spanish debt sold at auction (bonds) They managed to sell the amount they were looking for so this may strengthen the Euro at some point during the course of the day.
Going into next week be very cautious of the interest rate decision day next Thursday for both the UK and the Euro. Over the last 6 months or so this has been a bit of an anti-climax but if we see a rate cut in Europe or more QE in the UK then we could see a big movement next week.
If you feel you will need to buy or sell Euros or any other currency you may wish to get in contact with me at [email protected] discuss your requirement and I can explain all the options that are available to you.
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