President Obama last night announced a package of £300bn to create new jobs to cause a drop in unemployment currently sitting at 9.1%, which has helped strengthen the Dollar this morning.

UK Interest Rates

As expected UK Interest Rates were kept on hold yesterday which saw the Pound improve slightly across the board following the announcement. Also discussed during the meeting was the topic of further Quantitative Easing which has been on the agenda in recent months.

Policymakers have been under pressure recently after Chancellor George Osborne admitted earlier this week that the economy had weakened. However, the Bank of England confirmed it would not be extending its £200bn programme. This also helped to give Sterling some strength as on previous occasions when QE has been increased we have seen the Pound weaken. Sterling yesterday saw a positive movement against the single currency of €3,200 extra on a currency transfer of £200,000.

ECB Interest Rates

With the debt crisis still having a huge impact on confidence in the Eurozone the European Central Bank yesterday left Interest Rates unchanged. In the last few weeks in an attempt to stop the debt crisis spreading the ECB has opted to buy up both Spanish and Italian debt. Recent suggestions amongst senior economists have been that the ECB may have to cut rates if the crisis continues in order to avoid recession on the continent.

Many clients have asked me in recent months why the Euro is still strong against the Pound even though they are clearly struggling. One of the main reasons is that the UK still forms part of Europe and therefore each time the continent has problems it also has a negative effect on the UK and therefore Sterling.

German Economy Contracts

The Organisation for Economic Co-operation and Development has warned that Germany could be most affected by a drop in global trade.  German exports dropped month and month and fell sharply during July compared to expectation. This could be detrimental to the single currency as it is clear that Europe’s largest economy is weakening and therefore could create a further loss in confidence. Make sure you stay in close contact with your currency broker by using the free phone 0800-328-5884 or international number 0044-1494-725353.

US Exports Hit Record High

Official figures from the US Commerce Department showed that US exports hit a record high in July, which helped reduce the deficit to its lowest level in three months. The Dollar strengthened against the Euro and the Pound shortly after the release. So, if you are looking to buy or sell Dollars even if you don’t have full availability of funds, you can lock into a forward contract to protect your funds from any adverse market movement.

Safe Havens?

With the recent intervention by the Swiss National Bank this week in an attempt to devalue their currency the GBPCHF exchange rate witnessed a shift of over 9% in a matter of minutes. Traditionally used as a ‘safe haven’ currency the Swiss Franc became so expensive that the SNB was left with no choice but to intervene. With Gold at record highs investors are now looking at other alternative currencies.

One of the options is to look at moving funds to Australia where interest rates are currently set at 4.75% which will clearly provide investors with a decent yield but with the exchange rate currently so strong it suggests investors buying now will not be getting much benefit and may get hurt by a sudden reversal as shown recently with the Swiss Franc.

This could mean that Sterling could be used as a ‘safe haven’ currency, possibly benefitting from foreign investment and provide some much needed strength for the Pound. Whether or not this will happen is not yet clear so stay in close contact with your account manager who will explain the various options available to help make an informed decision.

If you have any questions on how these or any other releases may affect your transfers, feel free to call on FREEPHONE 0800 328 5884 or send me an email to teh@currencies.co.uk

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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.