This currency report will examine the factors that could impact on Sterling exchange rates. The report includes:
- UK GDP data – AUD strength
- European woes – Lacklustre USD
The table below shows the difference in currency you could have achieved trading at the high compared to the low over the last 30 days on a £200,000 currency transfer.
| Currency Pair | % Change | Difference on £200,000 |
|---|---|---|
| GBP/USD | 2.13% | $5,506.28 |
| GBP/EUR | 4.18% | €8659.41 |
| GBP/AUD | 3.58% | AUD 9019.25 |
GDP data released – UK recession deepens
According to the latest figures released yesterday, the UK economic output fell by 0.7% between April and June. This contraction was larger than expected and follows on from a contraction of 0.3% in the first 3 months of the year. These poor figures have been largely attributed to a slowdown in the construction sector, and the markets saw an immediate reaction with GBP losing ground against the Euro and USDOver the last 6 months I have highlighted the importance of the key GBPEUR 1.2500 level. For some time I have been saying that the stability of this resistance level represents a good indicator of which way Europe and GBPEUR exchange rate will head.
Recently, we have witnessed the pressure rising as a strong pound gathers momentum against a weak Euro. At time of writing, we are cemented in the 1.2700, and I feel the flood gates are now well and truly open to an attack on 1.3000 in the coming weeks.Even with weak GDP figures as seen yesterday providing a glimmer of respite, I feel the momentum is well and truly now with GBP strength in the coming months.
When to buy your Euros is vital to many businesses remaining competitive. Hedging the correct amount of funds at the most opportune time is hard enough in a quiet market, so contact FCD corporate desk on 01494 725 353 to find out more about our 24hr monitoring system and let us help you make more prudent decisions with regards to the FX risk your business may face.
Key data
Friday sees the release of German Consumer Price Index (CPI) which could create some volatility. Germany is commonly seen as the European barometer of heath, so keep up to date with your account manager prior to this release.
Strong Australian Dollar
The IMF (International Monetary Fund) had a stark warning for China recently. It highlighted the significant risk the worsening debt crisis in Europe is having and its effect on China’s growth. China’s property market is under pressure and second quarter growth figures are at a 3 year low, sparking fears about who will be dragging the global economy out of its slump.
Despite these worrying figures, the AUD has been strengthening against the pound due to enormous demand for Australian exports, helping to fuel China. China are keen to grow out of their slump, hence the requirement for Australian exports, which is why we are seeing a very strong AUD as a result and sever pressure on GBPAUD 1.5000.
Whether you’re selling a property in Australia and transferring funds back to Sterling, or buying AUD for your business requirements, contact our AUD dealing desk on 01494 725 353 for advice on utilizing Stops and Limits to minimize your risk to losses, while maximizing any gains that can be made from GBPAUD from spikes throughout the remainder of the year.
Lacklustre USD
As discussed in my last report, GBPUSD has been fairly range bound, as expected, between 1.5400 and 1.5700 for the last few weeks. GBP lost further ground against the Dollar yesterday due to the negative UK GDP figures. I project that this trend is set to continue as the turmoil in Europe progresses. Investors will be driven to the safety of the USD. Should you have an impending property sale in the states, or anywhere else in the world for that matter, contact William Smyth, our resident property expert for tips on selling and moving money overseas. Email wjs@currencies.co.uk
