Market Snapshot
The table below shows the percentage movement of exchange rates yesterday, along with the extra currency you could have bought if buying with £200,000.
| Currency Pair | % Change | Difference on £200,000 |
|---|---|---|
| GBPEUR | 0.9% | €2,260 |
| GBPUSD | 0.51% | $1,620 |
| GBPAUD | 0.61% | AUD 1,880 |
This report will take a look at the cost of buying foreign currency and factors that could affect your currency transfer
Banking Crisis could get a lot worse
Yesterday Barclays Chairman Marcus Agius resigned, saying “the buck stops with me” as the scandal over manipulating Libor interest rates claimed its first major scalp. We have learnt this morning that the Chief Executive Bob Diamond has handed in his resignation and an inquiry is being launched into the market rigging scandal.
The matter is so serious that the FBI is now conducting an enquiry into bank traders accused by regulators of conspiring to rig international interest rates. The FBI could even attempt to extradite any Britons that were involved in the affair should they feel there is a case to answer.
FCD Chief Executive Peter Ellis thinks that the situation is so severe that this could have a big effect on relations with the US which in turn may have a knock on effect for sterling exchange rates.
“The current U.K. banking scandal has the potential to escalate into something that could damage our relations with the U.S. permanently. I shudder to think of the implications should those who feel they have been “Hoodwinked” decide to litigate against the British Banks. This could culminate in a “Financial War” the likes of which we have never seen before”
I for one feel that this story has a long way to run. Barclays have been hit with a record fine (£290m) and I am sure over the coming days and weeks we will learn that the scandal is likely to involve many other banks both here and across the pond. The banking sector has been rigged with controversy recently. The banks are under fire for their role in the financial crisis, are facing a new wave of public outrage over a systems outage at RBS last month and evidence of mis-selling financial products continues.
It is no wonder that here at www.currencies.co.uk we are witnessing record breaking applications from clients looking at using a specialist for their currency needs. The trusts from the banks have diminished as they are a jack of all trades and master of none. If you are looking for a personal and bespoke service to help you maximise your currency transfer then join the thousands who currently use our service to send money overseas. Please feel free to set up a free no obligation trading facility by clicking here
Sterling exchange rate forecast
Sterling exchange rates weakened against most majors yesterday bar the Euro on the back of the latest Purchasing Managers Index data. The report showed that manufacturing activity continued its downward slide for a second month in a row. The data was better than forecast but was not enough to halt a slide for the pound.
This morning we have a batch of data releases from PMI for the construction sector, mortgage approvals andHalifaxhouse price data. All could be vital to how the pound performs today. With events inEuropecontinuing to be the main driver of currency movements you may find that the flight to safety weakens the pound against the USD but we should be fairly stable against the Euro.
Thursday’s Interest rate decision
Yesterday’s PMI has added further pressure on the Bank of England to introduce further monetary easing (QE) which could inflict further declines for the Pound. The market believes that the Bank will unveil the measures this Thursday to help boost and stimulate the country’s economy. Our regular readers will be all too aware that the mere mention of QE can damage the state of the pound very quickly.
If you require selling your sterling I would seriously consider securing your currency before the 12.00pm decision. I feel that if we see QE re introduced sterling could weaken over the following week to around 1.22 against the Euro and head back down to the 1.54 region against the USD. With excellent levels against the Euro and a decent gain against the USD recently don’t take the gamble with your money and forward buying may be a wise decision should you not need your funds immediately.
Euro Woes continue
European leaders surprised markets last Friday by agreeing to let their rescue fund inject aid directly into stricken banks while not adding to government debt from next year and intervene on bond markets to support troubled countries.
The euro slipped yesterday afterFinlandsaid it would block the euro zone’s permanent bailout fund from buying government bonds while theNetherlandsalso indicated opposition. It seems that while the whole region is not singing from the same hymn sheet the Euro will continue to weaken against a range of currencies. If you are in a position to sell your Euros I would recommend doing this in the very near future. If you are buying GBP with your Euros then this Thursday may bring you a small window of opportunity to secure a slightly better level than where current rates are. Unfortunately long term is not looking good for Euro sellers and if you have a small deposit available for a forward contract you may wish to consider this option.
AUD breaking news
Overnight the RBA kept interest rates on hold at 3.5% We were expecting rates to be unchanged but there is speculation that rates could be cut over the coming months to help the strong Aussie Dollar. Over the last couple of weeks the Aussie Dollar has strengthened by around 9 cents against the pound while gaining against most other majors. This is having a knock on effect on their exports. So if you are looking at buying the Aussie you may find slight sterling strength in the months to come.
