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 |
|---|---|---|
| GBP/EUR | 0.32% | €785 |
| GBP/USD | 0.89% | $2,836 |
| GBP/SEK | 0.62% | SEK 13,137 |
This report will take a look at the cost of buying foreign currency and factors that could affect your currency transfer as detailed below:
GBPUSD rates update
Eurozone news
World interest rates
UK GDP
USD rates continue to slide
The pound extended its decline versus the dollar despite positive UK housing data, as risk aversion resurged yesterday. GBP/USD exchange rates broke below the 1.6000 psychological level for the first time since early September during the morning and continued to fall throughout the afternoon to hit its lowest level in 6 weeks.
Analysts and I appear to agree that the bigger picture doesn’t look great for Greenback buyers as with the continued uneasiness surrounding the global economic recovery the Dollar continues to be seen as a safe haven and following the election in a couple of weeks and the political security that shall follow I can see it remaining the investment of choice for some time with rates moving down to the mid-1.50’s not out of the realms of possibility.
Those who have taken out forward contracts in the last few months may well look back on that decision in time as a very wise one. For those of you that have upcoming USD requirements and have not looked at the options available to protect yourself against adverse market movement call your FCD account manager today on 0800 328 5884.
Later this evening the Federal Reserve will be announcing the latest decision on interest rates. With no change almost guaranteed this should have virtually no impact on USD rates.
A Lull before the storm?
A very quiet day in the Eurozone yesterday kicks into life today and for the remainder of the week.
This morning we see a raft of manufacturing and business data coming out of Germany (which now take on a whole new level of significance with the news that Germany is expecting to see no or negative economic growth in the final quarter of 2012), tomorrow sees the latest Italian retail sales figures and Friday we have consumer confidence figures from France, Italy and Germany.
But surely the most significant action for the Eurozone this week is expected this afternoon when ECB President Mario Draghi visits Germany’s Bundestag lower house of parliament for talks with lawmakers on the euro zone debt crisis.
Many German ministers have major reservations about the ECB’s plans to buy bonds from heavily indebted euro zone states to help lower their borrowing costs, although Chancellor Angela Merkel has made clear she supports the program.
We are expecting Mr Draghi to hold a press conference later this afternoon, the contents of which are likely to have a fairly immediate effect on GBPEUR rates .
If you want to discuss this hot topic or have concerns about how it will affect your own currency requirements call us on 01494 725353 or email me direct at sah@currencies.co.uk.
Interest Rate Decisions
In addition to the US interest rate decision mentioned earlier in this report this week we have 3 other major central banks announcing their monetary policy decisions.
The Swedish Riksbank, the Reserve Bank of New Zealand and the Royal Bank of Canada are all expected to announce no change to their respective costs of borrowing during the next 48 hours.
This should result in little or no exchange rate movement but should we have an unexpected result or anything surprising in the associated rhetoric then we could see some instant volatility.
At times like this you may want to consider a “limit order” which allows you to set a level where our systems will automatically buy currency for you even if the price is only available for a few seconds. Call our dealing floor free on 0800 328 5884 to find out more about this contract type.
UK GDP out tomorrow!
It doesn’t matter what currency you are buying or selling, if your exchange involves Sterling then brace yourself for Thursday morning when the the Office for National Statistics is scheduled to publish the Q3 Gross Domestic Product report. These preliminary figures are expected to show that the UK grew over the last 3 months by 0.6%, a huge shift from the -0.5% contraction we saw in the second quarter and we should see Sterling benefit as a result though.
A note of caution though, a figure of 0.6% is probably “priced in” to current exchange rates so a figure slightly below that, although still positive, may lead to a negative reaction in the currency markets.
With a piece of data as significant as this I can’t stress enough the importance of being in regular contact with your FCD account manager and more importantly making sure he can contact you so you are able to react as quickly as possible to the world’s most volatile market!
