This currency report will examine the factors that could affect Sterling exchange rates. The report includes:
- Italian Bonds Due
- GBP EUR Exchange Rates
- Sterling Dollar Outlook
- JPY Interest Rates
The table below shows the difference in currency you could have achieved trading at the high yesterday compared to the low on a £200,000 currency transfer.
| Currency Pair | % Change | Difference on £200,000 |
|---|---|---|
| GBP USD | 0.80% | $2,464 |
| GBP EUR | 0.40% | €1,011 |
| GBP JPY | 1.51% | JPY368,440 |
Italian Bonds Due
Today we are expected to see the latest Italian bond auction. A bond auction is where a Central Bank offers long term bonds, usually between 3 – 30 years and investors and other banks bid for these bonds. Countries will hold these auctions in order to raise capital however to encourage this investment countries such as Italy that are facing challenging economic times have to offer large returns on the bonds. When a return breaches 7% it has in the past triggered a bailout from the EU as anything above this level is seen as unsustainable.
Should we see the Italian bonds push closer to or even breach this 7% mark we could see further negative permutations across Europe. If you would like to be kept in touch with the latest news call one of our experienced currency brokers today on 0800 328 5884.
Bank of England Lending Scheme
Later today we are due to hear details of a new initiative from the Bank of England aimed at boosting High Street bank lending. The aim of the scheme is to make billions of Pounds available to the banks as long as they are passed on to consumers and businesses that are in need.
One of the major issues in the UK economy during the recent recessions has been the lack of lending from banks. The current Eurozone issues have made it even harder for banks to borrow money so this scheme could provide a much needed liquidity boost to a faltering economy. This news comes following some positive mortgage data where the Council of Mortgage Lending stated the number of new mortgages had increased by 33%.
GBP EUR Exchange Rates
While Sterling Euro exchange rates remained close to a four year high yesterday there was a word of caution from the Office of Budget Responsibility (OBR). In order to keep public finances in check the OBR stated that the UK government should introduce further austerity measures. Should we see more austerity in the UK we could quickly see Sterling weaken from its current highs so while we have these strong trading levels against the Euro it may be worth making the most of it.
Sterling Dollar
Yesterday Sterling fell to a one month low against the US Dollar following the news that although the Federal Reserve (FED) may increase its Quantitative Easing programme it would only do so should the US economy weaken considerably.
While the issues in Europe continue to intensify it seems the US Dollar looks set to continue its recent run of strength against most the major currencies, in fact we saw it hit a 2 year high against the Euro yesterday. Despite the economic challenges America faces I expect to see the Dollar continue to remain strong, avoid more QE for the foreseeable future and move towards the 1.51 mark. So, if you are looking to buy or sell US Dollars make sure you speak to us today so we can discuss all the options available to you.
China’s Economy Slows
News this morning has shown that the Chinese economy grew slower than expected but was still showing strong growth. As the EU and US markets struggle China continues to expand rapidly and as a result we have seen Australian Dollar strength. China imports a lot of raw materials from Australia so a booming Chinese economy often means a bigger demand for Australian materials which helps their economy and therefore the Aussie Dollar. So, if you have an Aussie Dollar requirement and would like to find out how this news might impact you call us today
Key Economic Data
In what has been a quiet couple of days for key economic data releases today sees inflation figures released for Spain and Italy and producer price index in the States. To find out how these could impact your currency transfer speak to us today on 01494 725353 or email us on info@currencies.co.uk
