Bank of England Welcomes Mark Carney

Today Mark Carney will become the new Bank of England (BoE) Governor taking over the role from Mervyn King who held the post for ten years. Carney was previously the head of Canada’s central bank and in taking on the position at the BoE has become the first foreigner to head the UK’s central bank. He faces an unenviable task as the UK economy is stagnant, currently only just avoiding recession, interest rates are at record lows and the Bank has a large monetary stimulus package in operation which is contributing to high inflation which is currently running well over target. Carney will find himself stuck between a rock and a hard place as there is little room for movement on interest rates as raising them could cripple an already struggling housing market and reduce spending which could have a bad knock on effect to the manufacturing and retail sectors and there is no room to lower interest rates as this could send inflation even higher. In the meantime the big short term decision will be whether Carney decides whether to continue with the Quantitative Easing (QE) programme, many believe that he will want to quickly make an impact and dealing with QE could be how he stamps his authority. We have recently heard from the States that the FED will be tapering down their QE programme should the current more positive economic climate continue and so it would not be a surprise if Carney decides to follow in the Americans footsteps.

Moving forward it will be interesting to monitor the differences between the new and the old Governors of the BoE, having been used to Mervyn King’s press conferences and opinions a change could cause some market volatility. For example, following the interest rate decision on Thursday this week it will interesting to see whether Carney makes a change on interest rates or QE, personally I don’t think he will, but also whether he is more transparent with his comments to give the markets a better idea of what he is thinking for the upcoming months.

As a result this Thursday could be an interesting day, in fact should Carney speak anytime before this interest rate announcement I am sure the markets will be listening intently and will be looking to pick up on anything and everything he says. So, if you need to transfer money abroad and you are looking for the best exchange rates make sure you speak with one of our experienced currency brokers today. You can call us for free on 0800 328 5884 or if calling from abroad on 0044 1494 725353, alternatively you can email me directly on trh@currencies.co.uk.

Euro Exchange Rate News

It has been confirmed by credit ratings agency Standard & Poor’s that Cyprus debt rating has been downgraded to default. This news came following the admission from Cyprus that they would have to delay paying back the €1bn bonds which mature later this year. These bonds are now to be repaid in 2016 and this delay officially counts as a default. This news is likely to bring Cyprus and the other debt laden economies back into the headlines following a short period without us not having to read about the failing European economies everyday! This news could also cause concern for the EU with a number of other major European economies having to repay their debts and as Cyprus have set a precedent it may mean we see other countries following suit which could be damaging for the Euro.

In other Euro news Croatia today become the 28th member of the European Union. The country joins Europe during a time of flux and while there were celebrations in Croatia there were also those who are less certain that joining the Euro is a good move. In the meantime the EU will also be a little concerned that they are taking on another country facing difficult economic conditions with one in five unemployed and their debt classed as junk. This move could either help Croatia find some economic stability and with the might of the EU behind them recover from their current economic position or alternatively this weak economy could drag down other EU economies causing yet more trouble. Only time will tell, but one thing is for sure it will be important to keep a close eye on developments with both Croatia and the rest of the EU.

If you are looking to send money abroad speak to one of our friendly currency brokers today on 0800 328 5884 and we will be happy to discuss your currency requirements and the different options available to you so you can make an informed decision as to when best to transfer your funds internationally.