Sterling is looking very weak at present having fallen in value against all major currency pairings. The pound is suffering due to a series of poor data releases. There has been poor manufacturing, industrial and retail figures of late, not to mention the shocking trade deficit data. The main factor in Sterling’s weakness however is the EU referendum. Current FT polls show 44% of the UK population wish to remain in the EU, 41% wish to leave and 15% remain undecided. It is an extremely tight call, which will have major bearings on the UK economy. Personally I feel it would be madness to leave, it would strain trade relationships with those in the EU and hit our already dwindling exports hard. If we were to leave I would not be surprised to see Sterling fall significantly against a host of currency pairings.
I think we will remain in the EU, Cameron has simply been posturing in order to get what he wants, fingers crossed his reliance on a sensible vote from the UK population is not misplaced. Until the EU referendum is concluded I do not think there is much hope of significant Sterling gains.
When should I buy Euros?
If you are a Euro buyer and you have to move short term it may be wise to move sooner rather than later, As mentioned above I don’t think we will see any big swings in Sterling favor until after the EU referendum unless Draghi implements further QE. (see below)
When should I sell Euros?
Euro Sellers, Despite the current situation looking very rosy for the Euro at present, Mario Draghi the head of the European Central Bank has indicated he is willing to to increase monthly increments in the Quantitative Easing (QE) program as early as March. QE is essentially pumping money into an economy in order to stimulate growth. The last time this occurred Sterling rose in value upward of five cents.
Janet Yellen the Head of the Federal Reserve had previously stated there could be several rate hikes in 2016. She has however recently said that this is now unlikely due to global economic uncertainty. GBP/USD is very difficult to predict at present. Sterling’s weakness is obviously justified at present due to the factors listed above, but on the US side you have to take into account the Presidential election. During times of political uncertainty the currency in question generally weakens. Although I think we will have to get much closer to election time to see it have a significant affect. With the possibility of the EU referendum taking place possibly as early as June and the US election due in November we could well see a Sterling rally.
Moving short term however is a tricky task, for both Sterling and Greenback buyers I would suggest trying to time your trade on a Spike to maximise your trade. this is indeed a very difficult skill and I would advise getting in touch with a Broker can keep their eyes and ears ion the market for you.
GBP/AUD yesterday fell through the 2.00 resistance barrier, although I can’t see much further gains for the Aussie. I feel it is over valued. It has rallied due to a recent speech by Reserve Bank of Australia governor Glenn Stevens. Stevens had a bullish tone, stating there has been an increase in house building and consumer spending quelling fears of a drop in interest rates. However, I think a rate drop could still be on the cards, China could well change monetary policy in order to try and stimulate their current dwindling growth levels in which case the Australians could well to follow suit.
When should I buy Australian Dollars?
I think we will see some Sterling strength in the short to medium term, however I would set a realistic target rate. I do not think we will be seeing 2.06 + any time soon.
When should I sell Australian Dollars?
With the GBP/AUD exchange rate currently sitting at 1.99, Australian Dollar sellers are at some of the best trading levels in the last six months. It was not long ago the GBP/AUD rate sat above 2.20, a gain of 20 cents is definitely not to be sniffed at. A trade for AUD 100,000 between now and the is more than £4000 difference.You could hang on for the chance of small gains at the risk the procrastination could prove costly.
If you have a currency requirement I will be more than happy to assist. I will look at your trade individually and not only guarantee the best rates of exchange against any competitor but also time your trade to maximize your return. We have various contact options which I can talk you through to help-your individual needs. I specialise in Commercial and Property transfers so pleased o get in touch if I can be of assistance. You can contact me at [email protected]. Thank you for reading my blog it is appreciated and I look forward to hearing from you.