This currency report will examine factors that could impact exchange rates. The main focus will be on:
On Wednesday at 9:30 the Office of National Statistics (ONS) are due to announce the latest UK Gross Domestic Product (GDP) figures. These figures have been making headline news over the past 18 months as they highlight by how much an economy is either growing or shrinking. Currently UK GDP is at 0.2% meaning we are only just above recession levels (two consecutive quarters of below 0% constitutes a recession) so these figures on Wednesday could be crucial.
With George Osborne announcing a number of significant spending cuts and tax increases in the budget last week there is a real risk of the economic growth we have recently witnessed slowing down and talk of a double dip recession resurfacing. However, I would be surprised to see the effects of the budget to show in Wednesday’s figures but in the coming months there is a chance of Sterling weakness so if you need to send money overseas then it may be worth speaking to one of our knowledgeable account managers who can discuss the market outlook and all the options open to you.
Over the weekend some of the world leaders met in Canada for the G20 summit and the global economy was top of the agenda. The US took the headlines by stating that the world’s largest economies should focus on maintaining growth rather than cutting spending. These comments go to highlight that despite the recent signs of improvement across the globe there is still a real risk of a double dip recession. I believe the actions of Osborne and co will still have a big impact on the Pound and if the economy does not respond well to the spending cuts recently announced as per the US’s warnings we could see the Pound fall back below 1.20 on the Euro and back to the low 1.40’s against the USD.
On Friday the GDP figures for America were released showing that the world’s largest economy was still growing but at a slightly slower pace than last quarter. As a result Sterling strengthened gradually over the afternoon against the Greenback pushing the rates towards the 1.50 marker resulting in some very good buying opportunities.
In other news from across the Pond it has been reported that the US Congress has all but finalised the biggest reform of US financial regulation since the Great Depression. The reform aims to impose strict limits on the banks and President Obama said it would “hold Wall St to account”. With reforms aimed to keep the US bank in check investors confidence is likely to rise and could result in the Dollar strengthening. So, if you need to buy US dollars speak to FCD today.
Some of the key economic data due for release this week include the following:
Monday 28th German Consumer Price index
Tuesday 29th UK Mortgage approvals
Tuesday 29th European consumer confidence
Wednesday 30th UK consumer confidence
Wednesday 30th UK GDP
Wednesday 30th Canadian GDP
Thursday 1st UK & European Purchasing Managers Index
Friday 2nd US Nonfarm payroll
If you would like to find out how these data releases could affect your currency purchase please call today on our free phone number 0800 3285884 or +44 1494 725353.
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