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 | 1.25% | $3,318.83 |
| GBP/EUR | 1.20% | €2,510 |
| GBP/ZAR | 3.54% | ZAR 77,238 |
German Backed ESM Boosts Euro
The £400bn fund named The European Stability Mechanism (ESM), has finally been approved by Germany’s top court, providing some Strength to Euro during yesterday’s trading.
The ESM is a financial package put together by Euro-Zone to provide a permanent bailout fund to ailing member states. Germany represent 27% of the fund, therefore the fund would not have been able to proceed without German ratification.
Although this data should provide further strength for Euro short term, I feel additional gains against Sterling will be met with strong levels of support below the 1.24 level, before GBP continues its recent uptrend and makes its move towards 1.30 area later this year.
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.
Breaking News: Greece prepares to lease 40 uninhabited islands to cut its debt in order to meet fiscal targets.
Good time to buy USD
The USD has experienced some weakness recently, following a decrease in US exports widening its current trade gap by 0.2%, raising fears that the US continues to be susceptible to the Eurozone crisis.
There is some light at the end of the tunnel though for the US as top analysts at JP Morgan are predicting that the release of Apples new and slightly improved iPhone 5 later this month should increase US GDP by 0.5%.
Regardless of the new iPhone’s impact on the US economy, the Dollar has been dealt a heavy blow recently by Sterling’s rally of strength, weakening by nearly five cents in just a month. This recent rally against the USD has started to show signs of stalling however, as it hit heavy levels of resistance around 1.61 level. Although further gains cannot be ruled out, this represents a good opportunity for the USD buyers as we expect a correction back down to the towards the 1.52 region as we move towards the end of the year.
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.
KEY DATA: US Fed interest rate decision release today at 16:30
The Olympic Effect
The UK saw a drop in Unemployment during the three months to July following a report produced by the Office for National Statistics yesterday.
The number of people in work had increased by 236,000, the largest quarterly rise in two years and the number of Part time workers also increased 134,000, the highest level since 1992.
Although on paper these figures are deemed as positive for the UK and therefore Sterling, the ONS blamed the Olympics for the sudden boost of people in work, making this level unsustainable long term and unlikely to provide Sterling with much of a boost short term. In an article from the BBC however, the shadow work and pensions secretary, Liam Byrne, mentioned that “a tax on bankers could create a fund of several billion pounds, which could be used to kick start the construction industry”. If this were to come to fruition, it may provide some strength to Sterling moving forward.
For more information and to keep up to date with the data releases that could affect Sterling, speak to one of our dedicated specialists by calling 0800 328 5884.
Labour Strike Weakens ZAR
Yesterday saw the ZAR weaken significantly against a number of currencies, as another strike at platinum mine in Johannesburg, became obstructed by around 1000 men.
This un-expected movement fuelled by further unrest in South African labour forces not only weakened the ZAR but Platinum prices jumped 2.8%. Until this current state of unrest is controlled, I would expect the ZAR to continue to loose strength.
For help with your ZAR exposure during this time please set up an account with us by clicking here.
