GBPEUR update and forecast
Following data this month showing that the economy in the UK is getting better and worse in Europe, GBPEUR exchange rates reached fresh highs not seen since January of this year. The reason for this climb was a number of surprising data releases on last month performance and an interest rate cut in Europe. We now enter a quieter period of the month as less data is due for the UK and Europe. In this period the currency markets are normally driven more by Risk Appetite and market sentiment.
I expect to see GBPEUR generally drop over the next fortnight as profit is taken out of the market like other occasions through this year. In fact I would not be surprised to see the Pound drop by over a cent against the Euro before month end. This is turn will help euro sellers and could potentially make a €100,000 EURGBP trade secure over £800 more.
In the short term however we have German Economic Sentiment data out at 10 am today and Bank of England (BOE) Minutes due tomorrow. The German data is expected to strengthen the Euro meaning GBPEUR buyers might be wise to trade before the release and I expect the BOE minutes to be a non-event so to have little impact on the Sterling’s value.
GBPUSD this week
Cable prices (GBPUSD) have been performing well this month and have gained nearly 2 cents adding $2,050 on a £100,000. This week there is host of data for the US; Unemployment Indicators today, Consumer Price Index and Retail Sales figures on Wednesday, then lastly Production Price Index on Thursday. The data releases today and tomorrow are expected to show a fall meaning that many predict the dollar to continue to weaken through the next 48 hours.
Thursday’s Production Price Index data is however expected to show an improvement meaning the dollar could strengthen on the day. This generally means that USD buyers should potentially either move later today or tomorrow, if you are a seller however acting this morning or waiting until Thursday may be wise.
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Why is the South African Rand so weak?
Over the last year the RAND has lost in excess of 15%, over 9% of which has been seen within the last 3 months when it reached a near all-time low against the Pound. The reason for this dramatic fall can be attributed to a number of factors but the main reasons include; Gold’s value which is one of their largest exports is expected to finish the year down, the fact that their mining industry has had a number of cuts in their productiveness, and concerns that demand for their raw materials is falling.
Emerging markets including South Africa have also benefited hugely since the 2008 crash as western governments have dropped interest rates which drove investors abroad to seek higher-yielding assets. As the west has started to see consistent improvements this demand has fallen and the amount of foreign investment drop. I personally expect this trend to continue to see GBPZAR to continue its trend as growth continues to improve in the US and the UK.
Saying that however the currency market never moves in a straight line, so there will be opportunities for buyers and sellers if they time their trade. If you would like assistance with your currency transfer and to gain access to award winning exchange rates simply contact with the author – STEVE EAKINS – by calling the number at the top of the page or email him directly at email@example.com.
Currency Fact: The rand is named after an area near Johannesburg called the Rand, which is famous for its gold mines.