The Euro has clawed back ground against both the dollar and Pound overnight and in early morning trading. Dollar movements appear to have been a reaction to the Federal Reserve meeting yesterday evening in which the US base rate was held at 0.25%. Following the announcement, and in line with the FED’s new stance on Monetary Policy, the members of the committee gave insight into their projections for future interest rate movements and the outcome suggested rates are likely to remain at these levels into 2014. From an investors point of view this gives little support to the dollar and subsequently we have seen EUR/USD fall back into the mid 1.31 territory. I believe this to be a short term move and would still see the dollar back into the 1.20s as the global uncertainty will still lead investors to the ‘safe haven’ of the dollar.
For those with an interest in GBP/EUR we are following a worryingly similar trend to previous years. Since reaching the high of 1.2110 on the 15th January, the pound has lost 1.6% against the single currency in a two week period. Yesterday’s GDP (Gross Domestic Product) figures have done little to give confidence back to an already shaky pound with figures showing the final quarters growth of 2011 coming in at -0.2% worse than the predicted -0.1%. Should the next quarter also see negative growth we will officially be back in recession. Expect a rocky road ahead for this pairing as both the UK and Eurozone battle each other to produce the most negative data!! I still see a further move toward 1.15 and would urge Euro buyers to take stock of their current position whilst rates are still relatively strong.
As specialist currency brokers we can offer a number of contracts available in an attempt to safeguard your transfer. This can include the use of forward contracts, stop/loss contracts and LIMIT orders. The currency market is possibly the hardest market of all to predict as so much of the movements can be generated by factors out of your control. With the best will in the world we can attempt to forecast currency movements through identifying important data releases and following trends, however I believe a sensible way to approach the market is to identify a target level and stick to it. I have seen many clients set a target price, see that price reached, and then hold on for that little bit extra and end up securing their position below the original target price. The markets are just like a grumpy wife or girlfriend, they have a nasty habit of snapping back!!
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