In a announcement from George Osbourne in conjunction with the Bank of England we have been informed that there will be two new stimulus packages launched in order to help increase the banks lending to businesses and the public through cheap loans and mortgages. The Bank of England along with the government will provide billions of pounds in cheap credit to help the country out of the current recession and stave off the potential threat faced by the current Eurozone debt crisis, the Spanish banking issues and a Greek exit. As a result banking shares have spiked this morning as the markets see this as a positive move for the banks however Sterling exchange rates have fallen as this simply appears to be Quantitative Easing (QE) just re-branded! As it has been mentioned before on this currency blog QE can have a damaging impact on the currency markets as it is effectively pumping more money into the economy which as a result increases supply and therefore reduces its value, so while this may help the UK economy in the long term we could see Sterling weaken against a number of the major currencies.
More news from Europe has confirmed the credit ratings agency Moodys has downgraded Dutch and Belgium banks including ING and ABN Amro due to their exposure to the ever worsening Eurozone debt crisis. This news highlights that no country is safe from the debt issues and that the banks in Europe are all facing a similar struggle. We also saw yesterday Spain’s borrowing costs reach a new high at 7% which has been the level other countries have been forced to take a bailout so it will be interesting to see how the markets react and whether rumours of a Spanish bailout will surface on top of the banking bailout that we witnessed earlier this month. Th uncertainty persists in Europe and with the Greek election on Sunday so it means we could well see some of the most volatile times in the currency market, as a result it is more important than ever to stay in close contact with your dedicated currency broker here at Foreign Currency Direct plc.
You can call straight through to our trading floor for free on 0800 328 5884 or email firstname.lastname@example.org so we can discuss your currency reqirements and all the options available to you.