Report Overview
This report will discuss the issues that could affect exchange rates on the currency markets today:
- UK Sterling update – double dip fears
- Swiss franc update
- Euro Forecast
- Dollar Forecast
The table below shows the difference achieved over this week, comparing the high and the low when buying foreign currency
| Currency Pair | % Change | Difference on £200,000 |
|---|---|---|
| GBP EUR | 1.01% | €2,486 |
| GBP USD | 1.39% | $4,328 |
| GBP CHF | 1.96% | CHF6,332 |
USD Forecast – Risk appetite
This week we have seen the dollar continue to be one of the most volatile currencies with swings of close to 1% per day. On Wednesday the swing made buying $200,000 nearly £1,000 more expensive.
Regular traders will know that markets do not follow a pattern and there are no guarantees in where markets will move. The dollar is perhaps the most unpredictable as it is seen as an indicator of the health of the world’s finances. So, in some cases when we see positive data for the US the dollar weakens as the global markets are seen to be improving and money is moved away from the “safe haven” of the dollar into riskier currencies.
It was only a week ago when the US announced their plans to try and curb their weakening economy with “lite QE,” (a form of quantitative easing), so today’s report is one to watch.
KEY DATA RELEASE – US GDP figures at 13.30. This is currently predicted to show positive improvements for the US, making it more expensive to buy. However this is not always the case so clients with a dollar position should be in a position to move quickly. Contact your dedicated broker here if you would like to be informed of this release when it happens on 01494-725353.
GBP Forecast
People are becoming ever more wary about the possibility that the UK economy is faltering and will re-enter the recession before Christmas. The thought is that the 25% budget cut plans across the public sector will lead to higher unemployment and in turn lower consumer confidence. We get the first sign of this potential fall later today.
KEY DATA RELEASE – UK GDP figures at 9:30 – This is predicted to show that the UK economy has grown year on year, however any sign of negative or slow growth could scare investors and cause the start of a drop for the pound to sub 1.20 against the euro and potentially 1.53 against the USD.
EURO Forecast
Even though the EURO debt topic has not hit the national papers for some time it still is a massive concern for investors. Only last week’s release of their GDP data reminded us of their ongoing problems. Greece’s economy shrank by a worse than expected 1.5% making the possibility for Greece to escape its debt trap more difficult to see, plus Spain and Portugal barely grew.
KEY DATA RELEASE – BANK HOLIDAY MONDAY Euro Industry & Consumer Confidence at 10:00am. This will need to show positive signs to hold back the concern of debt defaults and not that the problem simply took a summer break.
Swiss Franc – continual strength
In early trading yesterday Switzerland released their employment figures with an improvement in levels which could further the run of strength for the Franc. Later today they release their KOF report, which is a confidence scale. Estimates are for this to further improve so clients with a CHF requirement may wish to purchase before the rates continues to deteriorate to below 1.57.
BANK HOLIDAY WEEKEND
Clients should be reminded that the additional day away from the markets are only UK wide. The US is releasing personal expenditures figures and the EU this month’s industry confidence figures. These are both seen as key indicators to the trends of their respective economies, and so it may be prudent to limit your exposure before the end of the day.
Stop, forward, limit and stop loss orders are all tools that clients of www.currencies.co.uk can use to try and limit exposure over this period, and still benefit from our award winning exchange rates. For more information call us.
