Sterling exchange rates have a had a stronegr end to the week continuing in from Wednesday’s strong surge. On Wednesday the Bank of England minutes indicated that the nine members of the Monetary Policy Committe (MPC) of the central bank all voted to keep on hold quantitative easing (QE), leaving levels at £375bn for now. This came as a big surprise to the market particularly as June’s meeting was a 6-3 split – with three members voting to extend. Has Mark Carney’s influence as the new governor of the Bank of England already taken over? For me I can see this as an opportunity for those looking at buying currencies such as the Euro, Australian Dollar and New Zealand Dollar and feel there may well be further opportunities for these currencies. For those buying US dollars the 4 cent shift seen in the last week should be viewed as a real opportunity as for me cable rates (GBP/USD) will fall back to 1.50 and below as the FED is likley to continue, in my opinion, with the tapering down of QE.
Should you be buying the aforementioned EUR, AUD and NZD then I would suggest holding on for now as I still feel there will be opportunities to buy at 1.17 on GBP/AUR, 1.66 GBP/AUD and 1.92/93 on GBP/NZD. For me I am still amazed how strong the Euro has remained as the underlining problems in Europe still seem to be brushed under the carpet on a far to regular basis. It also highlights to me how investors are focusing on the pound and the reaction in particular to low interest rates as the data sets in the UK seem to be improving but unfortunatley sterling is not. For me I think it is a matter of time before the pound sees a continued show of strength against the Euro and would hope to see levels back up towards 1.17/18 soon, for this reason anyone selling Euros may wish to look at their positions whilst rates are still offering strong value.
Like against the Euro I believe more value will be seen against the Aussie and Kiwi. I would look for further rate cuts and concerns from the respective central banks over the strength of their currencies to devalue the AUD and NZD and would look to hold on should you be buying these currencies.
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