This report will examine the factors that could affect Pound Sterling 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.
The Pound made small gains against the Euro yesterday despite poorer than expected Markit Services PMI. Sterling seems to be range bound in the 1.34’s-1.36 versus the Euro recently as the Greeks agreement to sign a third bailout package with their creditors and the slowdown in China has allowed the Euro to make a sustained recovery.
The situation in Greece was the defining factor in the decline of the Euro this year and now that there seems to be a short term resolution to the crisis, the Euro has managed to make gains on the back of any positive data for the Eurozone.
In the Eurogroup meeting overnight, the members maintained the harsh new bailout measures proposed, must be implemented immediately which should assist in the recovery of the Greek economy, and in turn will help to bolster the Euro.
Next month will be when the long line of reforms should set in place in order for Greece to access the first tranche of the €86bn bailout package and I expect that Sterling will begin to weaken further towards the end of this month as markets will begin to speculate on the outcome.
This time last year we were buying Euros at almost ten cents less than we are now, so although we have moved some distant away from the peak, taking advantage of the current levels in my opinion would be wise.
Following yesterday’s poorer than expected Markit Services PMI data all eyes now turn to Thursdays Bank of England’s interest rate decision.
Last month the 9 members of the Bank of England’s Monetary Policy Committee voted 8-1 in favour of keeping interest rates on hold. There were rumours of an interest rate hike from the Bank of England this year but expectations of a rate rise have now been pushed back as far as 2016.
This owes the slowdown in China which has had an effect on the global economy and therefore Sterling exchange rates. Although the UK is still the fastest growing economy amongst the group of 7 (G7) the UK economy is still at the mercy of global events as investors and traders continue to consider the Pound as overvalued.
I feel that GBP will begin to decline further on Thursday following the meeting, as I expect the Governor of the Bank of England (Mark Carney) will re-iterate that Sterling is currently overvalued and will take a dovish stance on the progress of the UK economy.
For more information on how future data releases could affect your currency requirement, please email me at email@example.com. Alternatively, you can contact any of our currency brokers on 00 44 1494 725353.
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