Later today we are due to hear from the Bank of England about a new scheme which is aimed at encouraging more lending through the High Street banks to businesses and individuals that are in need. During the recessions we have seen money supply dry up and the recent Euro crisis have made borrowing and therefore lending money even more difficult for the banks so this scheme could be very positive for the UK economy and Sterling exchange rates. It is expected that Mervyn King, Governor of the Bank of England will make up to £80 billion available to the banks should they increase their current lending by 5%. A further £80 billion could be excellent news for the UK economy and in the medium term could really boost the money flow in the economy helping it get out of the current recession. However, as we have seen with Quantitative Easing an increase supply of currency into an economy can reduce its value so despite its possible positive impact this may have a short term negative effect on Sterling exchange rates.

In other news it was announced last night that Moody’s has cut Italy’s debt rating as it warns they could see a sharp rise in their borrowing costs, this comes just hours before the latest Italian bond auction which is due today. Should we see the Italian bond auction breach the 7% mark we could see talk of yet another EU bailout and following the news that Moodys has cut their credit ratings we could see the borrowing costs rise today so if you need to buy Euros there could be some excellent opportunities.

If you are looking to transfer money abroad and are looking for the best exchange rates make sure you speak to one of our experienced currency brokers today. You can call straight through to our experienced dealers on the free phone number 0800 328 5884 or email us on info@currencies.co.uk