This report will examine the factors that could affect exchange rates this week in order to help you stay informed if you need to make a currency transfer. For current live exchange rates click here.

Greece stealing the headlines within the Eurozone

Today is a big day for Greece as newly elected Prime Minister Alexis Tsipras is meeting Eurozone finance ministers to plead his case that the €240bn bailout terms are too severe. The Syriza party have already indicated they want their bailout terms to be similar to that of the Germans dating back to 1953, where half of the German Debt was written off post World War two. This lead to instant growth within the German economy. Greece have made a 10 point plan to negotiate with Eurozone Ministers and a  proposal will be made to make the primary budget surplus target for this year 1.49% of GDP instead of the 3% which is being demanded. However there could be a plan B for Greece and a solution not to leave the EU as Panos Kammenos (Greece Defence Minister) stated “if Germany remains rigid... plan B is to get funding from another source” he then went on to indicate the three main targets are the US, Russia or China.

I’m of the opinion it’s not all doom and gloom for Greece. The European Central Bank (ECB) will not want Greece to leave the Eurozone due to they are fully aware if one country leaves this could lead to a domino effect and therefore other countries following suit, triggering turmoil in the EU. This is why I am strong believer that the bailout terms will be negotiated. Alternatively if Greece find support from the US, Russia or China we could see the country stay within the Eurozone and be given the opportunity to rebuild their economy as they would have the backing from another country for support. So, despite the uncertainty surrounding Greece if all is resolved we could see GBP/ EUR fall back to the low 1.30s.

If you are looking to take advantage of the current 7 year highs on GBP/ EUR and want me to be your eyes and ears within the markets, feel free to email me on drl@currencies.co.uk or alternatively call 01494 725 353.

Sterling Outlook

Yesterday we saw the latest National Institute for Economic and Social Research (NIESER) figures, which are an estimate of growth over the last 3 months within the UK. Figures came in 0.2% higher than previous given strength for the currency. However tomorrow at 10.30am Mark Carney Governor of the Bank of England and Chairman of the Monetary Policy Committee, is to give a speech on the BoE quarterly inflation figures.  I’m of the opinion we could see poor quarterly inflation figures due to the falling oil prices over the last month and therefore the BoE might have to intervene in order to stop the UK following the Eurozone into deflation. Furthermore in order to stop deflation the options for Mark Carney and the BoE would be to initiate QE (like the ECB announced on the 22nd January) or to cut interest rates further.

If you are looking to purchase a foreign currency using Sterling and wish to avoid potential market volatility feel free to get in touch on 0800 328 5884.

US Dollar Forecast

Yesterday John Williams the president of the Federal Reserve Bank of San Francisco indicated the US central bank are getting closer to an interest rate hike as the US are confident they will reach their full employment figures and the average wage is accelerating quicker than expected. If the US are the first to raise interest rates in 2015 we could see GBP / USD fall and find a footing in the 1.40s. Tomorrow is the January retail sales figures for the US. Retail sales figures are the measure of total receipts of retail. The consensus is for the figure to come in 0.4% improvement than previous, however with the bad weather around the states it will be interesting to see if their prediction is accurate. I’m of the belief the data will come in negative and therefore a possible window of opportunity for anyone buying USD.

The Australian Dollar takes a tumble in yesterday’s trading

The Australian dollar woes continued yesterday as Chinese Consumer Price Index figures (inflation) came in lower than previous by 0.1%. The Australian economy relies on China, as the two countries have had a long trading relationship and an under-performing Chinese economy means they won’t be purchasing Australian exports, in particular iron ore one of the largest exports leaving Australia. If you are selling Australian Dollars it might be wise to move sooner rather than later as the Chinese economy is growing at a much slower rate than expected. For more information on the contracts available feel free to call 01494 725 353.

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