Sterling report and forecast 16th March 2010 – Daniel Wright (Associate Director)
This report is written for current and potential clients of Foreign Currency direct to provide important information on Sterling and a basket of major currencies, alongside providing vital information on upcoming data releases that may affect the cost of sending money overseas or bringing money back.
GBP-EUR (-0.38%) GBP-USD (-1.11%) GBP-AUD (0.84%) GBP-NZD (0.95%)
This report will include the following
- Federal reserve interest rate decision
- Bank of England minutes
- Media quote ahead of minutes
- What else may move exchange rates this week
Fed interest rate decision tonight
Tonight sees the release of the Federal Reserve interest rate decision which has the potential to be a big market mover for those with U.S Dollar or Arab Emirate Dirham interests. Especially as purely on the rate movements yesterday, a £100,000 transfer to Dollars at the end of the day instead of the morning achieved clients a whopping $1600 less for their money – don’t be caught out yourself this week, let your account manager know what you are looking to do and he can keep you informed of market movements to avoid a nasty surprise.
No change in rates is expected however the Fed have been known to surprise in the past (most notably of late when they raised their Fed funds rate completely unexpectedly) this action led to rapid and major Dollar strength.
Also investors will be keeping a keen eye on any comments regarding the U.S economy and how it is faring and with data looking slightly better of late across the pond it wouldn’t surprise me to see Dollar strength overnight tonight.
Bank of England minutes & media quote
The Bank of England minutes released tomorrow morning are also due to be a head turner as we get to see how many members of the MPC were in favour of reigniting the Quantitative Easing flame for the U.K.
Should it evolve that it was a close vote out of the 9 members for example 5-4 or 6-3 then it suggests there still is scope for QE at the next decision and you may see Sterling lose ground accordingly, on the other hand a clean sweep and 9-0 against QE should bring Sterling strength.
If you are concerned about how these two decisions may affect any upcoming transactions you have be it buying or selling currency why not do what many of my business clients are doing of late and place a limit or stop order ensuring that you are protected from adverse market movements and can budget for your purchase accordingly.
‘The minutes could lead to a shaky day for the Pound tomorrow. Should QE become the main focal point again investors may run like the wind from Sterling as it tallies up yet another reason to steer well clear of it.’
What else might affect exchange rates this week?
Obviously those readers that have bought or sold currency before are fully aware many surprises can pop up on the markets, however the following data is also out this week that may affect exchange rates for Sterling against the Swiss Franc, Canadian Dollar and the U.S Dollar.
17th March – Swiss Trade Balance data
18th March – Inflationary data for both the U.S and Canada
19th March – Canadian Retail Sales data
Buying or selling Euros? Greece is still a factor!
Those of you with Euros still to buy or sell should also be extremely wary of any further releases regarding the economic situation in Greece and how the Euro Zone are planning to attack it.
A decision is now fairly imminent and which way the market goes is all dependent on how it is taken by investors – once again another reason to consider the various options available to you inclusive of forward contracts, stop losses and limit orders to protect yourself from adverse market movements.
If you are buying a property abroad, have business transactions to carry out or need to get money overseas for any other reason and want the best exchange rates, just fill in the contact form and I will be in touch with you shortly.