Market Summary
This report will take a look at the cost of sending money overseas this week and factors that could affect your currency transfer, focusing on:
- Bank of England Minutes
- New European Monetary Fund
- US Home Sales highest in 2 years
- South African Rand
Bank of England Minutes
Yesterday the Bank of England voted 9-0 to keep UK interest rates on hold which have remained the same since March 2009. In a united front the Monetary Policy Committee agreed to keep Quantitative Easing at £375bn but that some members mentioned that further stimulus may be required soon as growth is likely to be ‘subdued and uncertain.’
The general consensus is that further QE may be announced in November and that QE will ultimately increase to £500bn in due course. Generally QE has tended to have a positive impact on Sterling exchange rates compared to QE in the US which typically inspires global confidence and therefore a drop for the US Dollar. It is important that if you have a currency requirement to stay in contact with your account manager who can keep you updated with any movements over the next few days as this could provide some very good buying opportunities for those needing to buy Euros
New European Monetary Fund
France, Germany, Italy and Spain as well as other European nations have put together a document with the purpose of discussing a new European Monetary Fund. It is also aimed at encouraging members to give up some of their national sovereignty in order to increase togetherness during troubled times.
The concessions would mean giving European banks control of national fiscal policies and also changing the current European Stability Mechanism to the European Monetary Fund. If this plan goes through in the next few months it should provide the Eurozone with confidence and therefore strengthen the single currency.
US Home Sales Highest in 2 Years
House sales rose to their highest level in two years last month, which saw a brief recovery for the US Dollar in yesterday’s trading. However, all is not as rosy as may appear as even though the news was positive the figure is still well below the 5.5mn units expected in a healthy housing market. This could see GBPUSD exchange rate stay above the 1.60 level.
For many of our clients looking to buy property in Florida the news was interesting as according to National Association of Realtors ‘prices in the state of Florida saw a shortage of houses for sale and prices were rising faster than anywhere else in the country.’ If you are one of our many thousands of clients looking to purchase US Dollars for your dream home abroad please do not hesitate to contact us to discuss your needs.
South African Rand
The South African exchange rate has dropped recently owing to concerns in the mining industry. The recent problems with their growing deficit have seen many analysts predict that the ZAR will continue to weaken over the next few months. The deficit now stands at 6.4% of GDP up from 3% in Q2 in 2011. As global confidence has dropped this year owing to the instability of the Euro zone this has seen less investment in riskier currencies including the ZAR which has caused the weakness.
Therefore, if you have a requirement to buy or sell Rand keep in contact with your account manager who can keep you updated with any movements.
If you have any questions on how these or any other release may affect your transfers, feel free to call on FREEPHONE 0800 328 5884 or send me an email to teh@currencies.co.uk
