Good morning readers,
Today on a very quiet data release day eyes are firmly focussed on the sale rate and prices on the bond market. This is the market which prices government bonds and is a sign of confidence of that respective government. In particular today we have the introduction of new bonds from Portugal who many people have predicted will be the next country to need a bail out in the Euro zone. Generally speaking the faster and higher the price the more people will assume that Portugal will not need additional support so the euro will strengthen.
Clients that are looking to buy euro’s should however be wary as even if Portugal does need support it may not necessarily strengthen sterling against the single currency. In fact when Ireland needed support we actually saw the pound weaken as the UK is the 4th largest contributor to these support packages from the EU. On top of that we have a financial sector which is both a significant slice of our GDP and has its own large exposure to trade across Europe. So guessing the reaction to news on this topic is quite difficult and could really make property purchased or importing products a lot more expensive.
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.