Sterling Strength Stutters – GBP Exchange Rates
Yesterday sterling recent run of strength was halted somewhat as it was confirmed that despite unemployment falling, in percentage terms it was actually up to 7.2% moving it slightly away from the targetted 7% level the Bank of England had previously mentioned would be the level they would consider amending interest rates at. Following this news Chancellor George Osborne stated that the UK’s economic recovery is still not secured and despite the recent increase in the UK’s growth forecast he warned that his budget which is due in 4 weeks time will still have some hard truthes which he believes needs to happen in order to sustain this recovery. While Mr Osborne is saying some of the right things and unemployment is still very close to the 7% mark it did weaken Sterling slightly. As I previsouly mentioned I believe that now an interest rate hike in the UK is unlikley to happen until at least 2015 Sterling will struggle to strengthen much further in the short term. The economy is clearly improving but as Mr Osborne has stated it is still in a fragile position and there is still the risk that problems in the housing market or the economic impact of the floods could still damage the recovery and therefore Sterling exchange rates. So, next month’s budget will be very interesting and could have a large impact on the future trend for Sterling, and in the meantime I would expect Sterling to hold relatively steady.
USD Exchange Rates
There is a number of key economic data releases that could cause major USD volatility today with inflation figures and unemployment numbers two of the most noteable. It is predicted that inflation will rise marginally and that uneployment will fall and so if this is the case we could see some USD strength bringing us back from the current 4 and a half year highs. These highs have presented some excellent opportunities to buy USD and so it may be that this opportunity will not be around for much longer.
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