Monthly Archives: January 2011
The World Economic Forum meeting in Davos has correctly had the European debt crisis on the agenda. This European issue has the potential to throw the world back into recession, should an inability to repay debts cause global confidence to fall.
We are hearing some very strong language from Europe. The euro has ‘turned a corner’ according to Christine Lagarde, the French finance minister. ‘Never will we turn our backs on the euro. Never will we abandon the euro’ said Mr Sarkozy. This is all very encouraging but what will it actually entail? Summit statements are soon blurred once attempts to translate the promises into action are pursued.
I personally foresee further crisis up ahead for the euro. The ECB and Finance ministers do appear to be adopting a more aggressive stance but is it enough? Is it too little too late? For now the GBPEUR rate is in the mid teens. This is partly due to the worrying signs for the British economy in the form of shrinking GDP, rising inflation and high unemployment. EURUSD is still trading in the high 1.30′s, altough as the uncertainty in Egypt continues, we may see the dollar gain on risk aversion. Expect the euro to hold steady as the political situation is shown to be being managed, but don’t be suprised to see weakness once the Davos summit is confined to history…
The aim for this blog is to provide upto date information about the currency market. Helping you the reader time your currency transfer when sending money abroad or bring funds back to sterling. With the currency markets being fairly volatile at the moment and plenty to move the markets throughout 2011 I thought I would ask exactly what trades you had in mind for this year and when you think you may well require the currency?
By means of letting us know via the enquiry form we can contact you nearer the time or even earlier should the markets appear to be either in a great position or be moving heavily against you.
This week alone we have seen movements of over 3% against the euro and the dollar so this service can be very valuable.
Depending on your position I come with either great or bad news. The UK released their first prediction for GDP in the 4th quarter of 2010 with a surprising result. This is the first prediction as it collates information and expectations were for a small contraction compared to Q3 figures of 0.8% to 0.5%. The release actually showed a stark 0.5% contraction, negative growth, which surprised economists and resulted in a sharp movement on the currency market as investors moved away from sterling. This has resulted in over a 1% loss for the pound again most major currencies including both the dollar and the euro. So far on a £200,000 exchange you will achieve €3,200 less Euros and $5,750 less Dollars, a very large movement that may not have finished yet.
It shows once again that markets can surprise us and that no one knows where the markets will move. Being in a position to trade in a moment is key to limit potential losses or gains and when there is a good rate of exchange to secure it. A lot more is lost through indecision compared to no decision on the currency market.
The remainder of this week we still have large reports from both the euro and the dollar so I do expect the volatility to remain, however I don’t expect these losses for sterling to be regained.
If you want to be kept up to date with this story please contact us today and one of the experienced brokers who write on this blog will be in contact to see how we can help.
Later this afternoon at 3 pm GMT the EU release their consumer confidence which is normally a report that does change exchange rates. Today however I personally think that it will be even bigger news to the market as it also gives consumers thoughts about spending through the debt crises that in turn will probably affect the long term recovery of the euro zone. Expectations are for a drop so this morning we have already seen the euro weaken as it becomes cheaper to buy euro’s. Later today after the report I would expect this trend to continue.
In other news we also have a number of reports coming from the US. As regular traders will know relationship between the dollar and euro is key as it is the largest traded currency pair. As this price moves and currency changes hands it can affect GBPEUR as money either pores in or out of the euro. These reports include jobless figures and home sales in the US, both of which are expected to be positive. So in turn could further extend gains for sterling to euro clients as money goes out of the euro into the dollar.
Register your interest to the right of this blog if you would like to be contacted with breaking news if you do need to make a currency exchange.
Unemployment in U.K unchanged, European construction contracts however Euro strength over the course of the day against most major currencies
Today the markets are coming to a close after another eventful day. We have seen figures from the UK showing that unemployment has remained unchanged and European construction figures showing a considerable contraction. This has changed markets as the euro has ended up stronger, but that contradicts these results so what has changed to strengthen the euro?
More news around the euro debt crises has come to the market that has added strength and again this news story has overshadowed what would normally be big news. It shows again how surprising the markets are and what can be strongly predicted can change quickly. If you are in the position either buying or selling euro’s I would suggest exchanging when the rates are good rather than trying to squeeze more out. Many say more is lost through indecision than no decision.
Later this week we still have ECB’s monthly report, EU Consumer confidence and UK Retail figures being released. All of these could continue these large swings so if you do want assistance feel free to contact us today using the enquiry form.
Speak to you soon.