Sterling rally continues

Belief that the global economy is recovering has helped Sterling continue its gains this morning. At the time of writing rates are as follows:

GBP/EUR 1.1650 – 6 month high!
GBP/USD 1.6626
GBP/AUD 2.0180
GBP/CAD 1.7968
GBP/NZD 2.5507
GBP/JPY 160.02

Pound Euro rates are now at a 6 month high, and the rise is being driven by investors returning to perceived higher risk currencies like Sterling. Be aware though, the Euro is also gaining, just not as much as the pound which is why rates are rising. Today we have some important GDP data from the EU, and if its better than expected these gains may be short lived.

Another reason for the pounds rise is the weakening of the US Dollar. Following news that General Motors, one of the worlds largest car makers have gone into recievership, this has severely dented confidence in the US economy. So, as investors move their funds from USD to other currencies, Sterling is the winner as the recent surge in it’s value demonstrates.

It is in these times that it is important to make decisions on when to purchase your currency. If you are buying with Sterling, then rates are now at record levels for many currencies, and so serious consideration is needed to fixing your rate while times are good. Holding out in the hope rates will continue to rise is simply a gamble. Of course you could win and rates may keep going up, but as is often the case, spikes like this are extremely short lived and rates could quickly drop back away.

As mentioned in yesterdays post, it is situations like this where Limit Orders allow you to continue aiming for a higher rate, while at the same time placing a Stop Loss order so if rates do tumble, you are protected and dont lose out completely. Leaving it to chance is a risky strategy.

For those selling currency back to Sterling, while rates may climb or may drop in the short term, most medium term forecasts do suggest that rates will climb this year, and so if I was selling a currency back to Sterling, I would move very quickly.

Click the orange banner to open a free trading facility with FCG – this allows you to discuss your requirments without any obligation, and allows you to have all the information you require to make an informed choice of when to fix your rate.

UK Confidence
In another boost for the pound, UK consumers were more optimistic last month about the future than they had been for six months, according to the Nationwide Consumer Confidence index.

The index hit 53 in May, up from a reading of 51 the month before and the highest reading since November. Despite the improved outlook for the future, consumers remained pessimistic about the current situation. “It is likely that confidence will remain fragile,” said Nationwide’s chief economist Martin Gahbauer.

Todays Data
We have some data for the UK, EU and US today, however most will be waiting for the major data releases tomorrow, namely the interest rate decisions for both the UK and EU.

We have already had GDP data from Australia that was much better than expected which has dropped the GBPAUD rate slightly.

For the UK today we have Purchasing Managers index and BRC Shop Price Index data.

For the EU we have Purchasing Managers Index, Gross Domestic Product and Prouducer Price Index

For the US, this afternoon there is some employment data, Factory orders and mortgage applications.

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