- Euro Outlook
- UK Still in Recession
- US GDP
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.
The streets of Athens and Madrid have both seen anti-austerity protests turning into riots over the last few days as the two governments prepared to make financial cuts. In Greece there have been claims that the coalition government has reached an agreement on the austerity package (expected to be worth around €11.5bn) and that it will be announced on Monday.
In Spain we heard yesterday the new austerity budget for 2013 which included new spending cuts and a freeze on public spending. The scheme is designed to help the country which is struggling under high unemployment and a shrinking economy. It will be interesting to see how the markets react to this package over the coming days. On Monday in Spain we are also expecting stress test results for the Spanish banks.
In the meantime it was also announced that unemployment in France had topped 3 million people as one of the EU’s largest economy continues to struggle. While the French government placed the blame for this on the previous regime of Nicolas Sarkozy it has increased the pressure on new President Francois Hollande who’s popularity is already at the lowest level since he came into power.
While the Eurozone continues to battle with protests and rising unemployment for clients looking to buy Euros it will now be key to see the reaction to the Spanish and Greek austerity measures. Should the measures be seen as positive we could see the Euro strengthen back against Sterling down towards the 1.22 mark, should the opposite be true though we could see Sterling push up towards the 1.28 level.
UK Remains in Recession
Figures from the Office for National Statistics (ONS) yesterday showed that the UK economy had contracted in the second quarter of 2012 by less than had been expected. Although the figures confirmed the UK is still in recession the fact the contraction was less than predicted meant we saw Sterling strengthen over the course of trading.
The UK economy has contracted for three consecutive quarters and this has maintained pressure on Sterling exchange rates. I would not be surprised to see this recession continue through the final quarter of this year and into 2013 and as a result we could see pressure remain on Sterling exchange rates.
Gross Domestic Product (GDP) figures in the States yesterday were revised downwards to 1.3% compared to the previously estimated 1.7%. Manufacturing and agriculture sectors have fallen which has led to the weakening of the US economy. Despite this drop Sterling Dollar exchange rates held fairly steady still presenting some excellent buying opportunities for clients looking to buy Dollars.
China Announce Fund Injection
It was announced yesterday that China’s central bank, The People’s Bank of China, had injected 365bn Yuan into the money markets to help boost their economy. China has recently been seen as one of the fastest growing economies in the world and while their economy is still in better shape than many others this was negative news for the AUD. Demand from China for iron ore and coal has helped boost the Australian mining sector and as a result has driven the country’s economy. Signs that the Chinese economy is slowing has led to the Australian Dollar weakening. So should we continue to see negative data from China we can expect to see some more Australian Dollar weakness.
In other news
Figures from the Financial Services Authority (FSA) have shown that complaints about the banks have risen by 59% to 3.58million. The complaints range from service offered to charges levied. At FCD our primary focus is to make the process of transferring funds abroad as easy and straight forward as possible. We do not charge any hidden fees and pride ourselves on bank beating exchange rates. So, if you are looking to discuss your currency requirements and the options available to you please do not hesitate to contact one of our experienced, knowledgeable and friendly currency brokers on 0800 328 5884.