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 in just 7 days affecting Pound Sterling rates when buying £200,000:
|Currency Pair||% Change||Difference on £200,000|
Cable rates have been relatively range bound since the start of October. The rates have been jumping between the low 1.33s to the high 1.30s as the markets continue to speculate on whether or not there will be one more interest rate hikes from the Federal Reserve before the end of play 2017.
Last Friday however saw a huge shift in sentiment in favour of the greenback as investor’s drove their money away from the Euro and into the Dollar on the back of the Catalonian crisis, prompting strong gains for the greenback across the board. In particular the Pound, jumping by almost 0.71% making a $200,000 transfer £1,100 more expensive.
I found the impressive Knee jerk movement against the Euro more interesting however. The 1.6% (3 month lows) drive as the news broke out of Spain showed how wary the markets are of the social unrest in Europe.
It is worth then pre-empting what might happen should Spain eventually retake control of the situation. I would argue a show of unity could swing the rates back round; reversing the Dollar’s recent gains isn't out of the realms of possibility. As such if you are looking at buying Sterling with Dollars, it may pay to capitalise on current levels.
With Trump's 1 year anniversary fast approaching it appears the US president is finally clear to pursue a number of the tax reforms and liberating economic policies he had promised during his campaign, having received an initial green light as his budget resolution was pushed through the house of Representatives last Thursday. With the US treasury secretary Steven Mnuchin reaffirming over the weekend the White House's absolute confidence the overhaul will not be derailed, it is now just a question of when. I can see the dollar gaining a fair amount of long term strength on the back of this. Investor's committed heavily to the greenback following president Trump's election last year, with the dollar reaching multi decade highs against the pound, hitting sub 1.25 levels. Now that his promises seem all that more likely to come true, surely a move back below 1.30 is a distinct possibility.
There is a host of consumer spending data out early this afternoon which I expect to come out strongly given the impressive profits posted by US heavy weights Microsoft and Amazon last week. I can see this being brought up during the Federal reserve meeting on Wednesday afternoon which could see them hint once more to a final rate hike in December. This combined with a likely rise in tensions in Spain should see continued strength in the Dollar, I can certainly see the greenback getting stronger as the week goes on. If you have a short term dollar requirement, it may pay to act sooner rather than later.
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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