This report will address the factors that are likely to affect exchange rates today if you are buying abroad or making a currency transfer. The table below shows the difference you would have received when buying £200,000 at the high compared to the low over the last 7 days.
| Currency Pair | % Change | Difference on £200,000 |
|---|---|---|
| GBP/USD | 0.96% | $2537 |
| GBP/EUR | 1.19% | €2525 |
| GBP/THB | 0.60% | THB 49971.55 |
UK surprised by more debt
Sterling has been put under some real pressure over the past 24 hours, following news that the UK Government has had to borrow £600m in order to bridge the gap between spending and revenue in July.
July is typically a good month for government revenue due to quarterly corporation tax and self-assessment tax returns. Last year in the same month for example, the ONS (Office for National Statistics) recorded a surplus of £2.8bln.
As we know surprises are not taken very well by the market and our outlook for GBPEUR short term stays fairly negative, but should be contained with heavy support at around the 1.25 level. We do feel that a correction is overdue and moving towards the end of the year, could see Sterling break past heavy resistance at around the 1.28 level.
One facility to help you take advantage of any gains is a stop loss or limit order. A limit facility automatically purchases currency once the market moves to a specified rate and a stop loss order can protect you against the market moving through your worst case scenario, speak to one of our consultants to find out more by calling 0800 328 5884.
Euro zone rumours move Markets
Although we are yet to witness the ECB plans to save the Eurozone (Released in September), Spain have already started reaping the benefits after its cost of borrowing on short term bonds dropped significantly from 4.24% in July to 3.33% in August.
This drop was mainly fuelled by speculation that the ECB will buy Spanish bonds after Prime Minister Mariano Rajoy said he would “consider asking the ECB to buy Spanish bonds” opening up some short term volatility on major currencies during yesterday’s trading.
The next big move could be triggered sooner rather than later with German GDP figures released Early Thursday morning and meetings between Greek PM Antonis Samara and German Chancellor Angela Merkel. At the heart of the discussion will be whether Greece have done enough to receive its next loan of €31.5bln and to discuss an unlikely two year extension on their austerity programme. All of the above could cause volatility, if anything other than the expected occurs.
If you have a Euro exposure, please speak to one of our Specialists to help manage your exposure through these volatile times by calling: 01494 725 353
Good time to buy USD
USD took a beating yesterday losing ground against both GBP and EUR on the back of speculation that the ECB will soon intervene to help stem the debt crisis in the euro zone, Pushing GBPUSD to a near two month high and EURUSD near 7 week High.
GBPUSD has remained range bound for some time now and this recent lift should provide Dollar buyers with an opportunity to over-hedge ahead of our long term projection, which could potentially see the 1.50 level of support being tested by early next year. Some short term gains in the months preceding could be made, however is expected to be met with heavy resistance around the 1.60 level.
If you have exposure to USD, speak to one of our Dollar specialists to help manage your risk by setting up an account with us.
THB on the rebound
Between April and June, growth in Thailand increased by 3.3% compared to analysts forecasting only 1.7%. The question remaining is whether this growth is sustainable or simply an inflated figure following factory’s re-opening after the devastating floods last year.
The Thai government have now announced they will put measures in place to prevent such catastrophes from having such an impact in the future, including a 2tln Baht capital injection into their infrastructure.
This could cause long term Thai Baht strength, so speak to one of our Specialist’s to take advantage of the rate today by sending us an email to info@currencies.co.uk.
