The final day of the week saw GBP/EUR being the most watched currency pairing for Sterling on the currency markets, as buying Euro rates had a high to low difference of 2 cents. Furthermore, the rates themselves took on the character of a roller coaster, both rising and falling by factors of whole Cents.
The reason for such uncharacteristic movements is rooted in markets trying to second guess events next week.
Much of Sterling’s recent weakness has been rooted in events in China. As the world’s second largest economy, news of its slowdown has sent ripple effects throughout global financial markets.
Serious slides in Asian, European, and North American markets have meant that confidence in the UK’s lucrative financial service industry is at its lowest point since the financial crisis according to George Osborne.
This lack of confidence in the UK economy has translated into heavy Sterling weakness over the past five business days.
More news is coming out of China very early on Monday morning. As markets are not active over the weekend, a global rush of buying and selling activity ahead of the news caused the serious and contradictory movements on Friday afternoon.
The trade balance data which is set to come out is a key indicator for global financial markets for how the next month will unfold. Some analysts believe that China’s recent steps to severely devalue their currency may have translated into better revenues for their exports, whilst others believe that the slowdown in South-East Asia cannot be fixed so quickly.
This explains the sharp changes in Sterling’s value in both positive and negative directions, as China’s secretive economy makes it difficult to get a clear consensus on the markets for the nature of the news to come out, and whether this will cause further harm to the UK financial service sector and therefore the Pound.
The news will come out before UK markets open, so anyone with a Euro buying requirement over the next few weeks should contact me over the weekend on email@example.com in order to discuss a strategy for your transfer and safely navigate the volatility expected at the start of next week and maximise your currency return.
Should poor news come out, we may see similar 1% daily falls of last week, or a stabilisation of China’s economy will see much of the gains for Euro sellers reversed rapidly. A premium is put on being able to act quickly.
I will be at my desk for the release at 7am on Monday, if you notify me of your requirements ahead of time, I can contact you instantly to explain the nature of the news, how the currency markets have reacted, and outline what the trend will likely be for that day in order for you to make an informed decision about your transfer.
As a final point I have never had an issue beating the rates of exchange offered elsewhere, and any favourable levels which emerge tomorrow for Euro buyers or sellers can be fixed to avoid any harmful movements in the markets making your currency transfer more expensive in the future.