Getting the best exchange rate can be achieved by understanding what is driving rates and the service of a specialist currency broker. Below are movements for yesterday affecting Pound Sterling rates when buying £200,000:
|Currency Pair||% Change||Difference on £200,000|
The UK’s consumer credit hit £200BN yesterday and following this the rating agency Moody’s issued a stark warning to the UK by downgrading the outlook on debt based bonds. This is a worrying position for the UK, as fears grow surrounding the ability for consumers to pay back what they owe as the cost of living increases and our economy weakness.
What seems to be more concerning is that these levels of unsecured lending haven’t been seen since 2008, just before the global financial crisis. The annual growth rate for consumer debt remains above 10%. Bank of England Governor Mark Carney has previously raised his concerns as the squeeze on households affects the ability of the consumer to repay the debt.
The latest consumer debt report mixed with last month’s slowdown in inflation makes for a straight forward decision for me on Thursday. I personally do not think the Bank of England will raise interest rates this week. What is interesting and worth note of any clients with a Sterling requirement is that Lloyds bank believe that the vote will change to 6 – 2 compared to the 5 – 3 we saw in June. This could potentially cause sterling to weaken. The more likely it is that interest rates are to be raised, the more positive this is for the currency in question and vice versa. It will be interesting to see what tone Mark Carney takes at the subsequent press conference.
Additionally, the quarterly inflation report is set to be released at the same time. The report is expected to contain some revisions and if these continue to show below par economic growth mix with high levels of inflation I would expect to see some volatility on sterling exchange rates. Not only could this provide some short-term opportunities, but Mark Carney’s speech may provide investors with clues on the future direction for the pound.
For more information on how future data releases could affect your currency requirement, call our trading floor on 01494 725 353 or email me here
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