Greek uncertainty continues to be the main driver on GBPEUR with any resolution likely to cause the Euro to strengthen against the pound. Last night the Greeks rejected the first offering which has unsurprisingly caused the Euro to weaken. It is expected a deal will be reached Wednesday or Friday but Euro rates will likely be very volatile and there remains the question what if they cannot agree?
Greece will potentially run out of money at the end of the month and there are various deadlines that need to be met for the Greek government to continue to function and pay day to day bills. This situation could easily spark another sell off on the Euro which would lead to rates spiking higher but I personally expect to see 1.30 again before we see 1.40. I just cannot see how Greece’s creditors will not take on a more accommodative stance, however they will not give in easily and this could lead to the kind of volatility on markets we have become only too familiar with recently.
The UK’s General Election and the ability of the Eurozone to ‘muddle’ through their problems should mean Greece stays in the Euro which would then stage a recovery against the pound. Euro to GBP sellers should not get too excited however, any arrangements will do little to tackle the root and cause of the problems. I feel they are simply putting the problems away for another day…
In short if you need to buy or sell on GBPEUR keeping up to date with the very latest news is the best way to maximise your transaction and limit the losses. Speak to one of our friendly and experienced traders on 0800 328 5884 to learn more.
The pound has hit some form in February as January’s economic data has shown improvements and the Bank of England confirmed any rate hike may now come at the end of 2015. Today’s Inflation data will carry a lot of importance and anyone buying or selling the pound today or this week should take note.
DataWatch Today – 09.30 am UK Inflation Data. 12 separate pieces of Inflation data will be released indicating the rate of which prices are rising (or falling). I personally expect the pound will drop as the Inflation data shows a decline and removes further the need for any interest rate hike. To get a full overview of just how today’s sterling data will pan out please contact the office on 0800 328 5884 or make a free quote request here.
The main news for the pound in 2015 will of course be the General Election in May. Recent polls indicate an extremely close call with Labour and Conservative favourite depending which poll you listen to! Such uncertainty will surely lead to GBP losses in the future. If you are planning on buying a foreign currency later in the year you might wish to consider our range of contract options including the forward contract. You can view all the options on our website here, please contact one of the team to discuss further to see what will suit you best.
The USD has strengthened in 2015 due to the improved prospect of the United States raising their base interest rate. This expectation has been based on strong improvements in the US economy but I do feel any decision to hike interest rates will not be taken lightly. The lower Oil price has helped the US economy grow faster than expected but also means Inflation is not rising too fast. Much like with the UK there is less of a call to raise interest rates if prices aren’t rising so fast.
The US situation is interesting since any changes in their interest rate will have a knock on effect globally and other currencies. The big news this week for the US is the Federal Reserve Meeting Minutes on Wednesday evening. If you have any USD to buy or sell making some plans before this event might be a wise move.
The Australian dollar has weakened as the Reserve Bank of Australia (RBA) cut their interest rate to 2.25% this month. We consequently hit the magic 1 GBP for 2 AUD level and I think we will spend much of 2015 above this rate.
Breaking News – RBA Minutes. Released overnight the recent RBA Minutes have shown us that the decision to cut interest rates this month was based on weaker than expected economic data and an expectation that unemployment would peak higher than originally forecast. The RBA also stated it is still targeting a weaker AUD to help boost their exports. The Aussie has strengthened a little as the RBA have not highlighted a further cut next month as some had expected.
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