This report will examine the factors that could affect exchange rates this week. For current live exchange rates click here.

Talk of a ‘Grexit’ Intensifies

As the new PM and finance minister of Greece continue their whirlwind tour of Europe the former head of the US central bank, Alan Greenspan has warned it may all count for nothing. Mr Greenspan, who ran the Fed for 19 years up until 2006 said that he believes Greece will eventually leave and that parting from the single currency economy is actually the best strategy for both parties.

At the same time UK Chancellor George Osborne stated that a Grexit would cause “deep ructions” for the UK and yesterday morning David Cameron chaired a meeting to discuss the impact on the UK of Greece leaving the Eurozone and how to try and counter it.

In my opinion the situation in Greece and the ‘will they won’t they’ leave the Euro scenario will continue to hang over the single currency. This uncertainty is likely to keep the Euro under pressure however, it is clear that while this is causing Europe problems there could be negative knock on effects to the UK. Our banks may not be overly exposed to Greece and Greek debt but the almost inevitable contagion should Greece leave the Euro could have a severely damaging impact on UK trade and therefore Sterling. So, despite the current hype about Greece leaving the Eurozone the strong GBP EUR levels may not last for long.

So, if you want to make the most of the current 7 year highs on GBP EUR speak to one of our senior currency brokers by calling us on 01494 725353 or set a call back by clicking here.

UK GDP and Inflation Focus

Today we have the latest Gross Domestic Product estimate from the National Institute for Economic and Social Research (NIESR). Expectation is for it to remain relatively steady at around 0.6% but any improvement could lead to a spike for Sterling. However, with the quarterly inflation report from the Bank of England (BoE) on Thursday it could highlight the rising concern of the UK following in the Eurozone’s footsteps heading towards deflation meaning Sterling may soon find itself under pressure. I expect inflation to be very low especially with falling energy prices and so we could see the BoE forced to act in order to stave off deflation before it is too late.

This could take the form of QE or even cutting interest rates either of which could damage Sterling’s current position. So, for clients looking to sell GBP Thursday could be crucial and for clients wanting to buy currency acting before the BoE announcement may prove to be a wise move. To find out more call us on 01494 725353.

US Dollar Forecast

Today is another relatively quiet day for economic data in the US so it is likely all eyes will remain on Thursday’s retail sales data. The USD continues to remain strong against the Pound so retail sales figures later this week will be interesting in order to see whether the recent bad weather has damaged the US economy. I predict the figures to be weak and provide opportunities for clients looking to buy USD.

Swiss Economic Outlook

Today we have the latest set of unemployment numbers from Switzerland coupled with their inflation figures in the form of CPI data. Following the shock move from the Swiss National Bank (SNB) where they cut interest rates the markets have been analysing what effect this has had on the Swiss economy. So, today’s figures will be crucial for any clients looking to transfer CHF. The expectation is for unemployment to hold steady but inflation fall even further which could weaken the Franc and present some opportunities for clients looking to buy CHF.

In other news...

It was announced by the BBC yesterday that HSBC had helped very wealthy clients evade hundreds of millions of pounds worth of tax in what is another disappointing episode for the UK bank. With LIBOR fixing, exchange rate manipulation and now this it is a wonder when the scandal over the banking sector will ever end.

While we at Foreign Currency Direct also like to help clients’ save money we do it through our award winning exchange rates and do not reserve this service for just the wealthy few. So, to find out more about our service and how we can save you money regardless of how much you transfer click here and in the meantime don’t bank on the likes of HSBC for a good deal!

 

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Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.