We have seen a good run for the pound all week, and this morning rates seem stable. At 08:30am rates are as follows:
- GBP/EUR 1.1724
- GBP/USD 1.6558
- GBP/NZD 2.5227
- GBP/AUD 1.9980
- GPP/CAD 1.7874
- GBP/CHF 1.7972
- GBP/ZAR 12.834
- GBP/JPY 158.21
The pound is at 1 month highs against the Euro and US Dollar, and not far away from the highest rate all year. The rise is after data showing rising UK house prices suggested property prices have stabilised from a steep fall, as outlined in yesterdays report.
Broad losses in the dollar also helped to prop up sterling, which recovered from two days of losses as a rise in UK share prices helped to stoke demand for currencies considered to be higher-risk.
It recovered from losses over the past two days when a pause in risk demand had stung the currency. Despite Thursday’s gains, sterling is on track to end the month more or less flat against the dollar and the euro, and some analysts are sceptical about whether the UK currency will significantly extend its rally from earlier in the year.
Others in the market point out that the UK’s weak fiscal position will haunt the currency, while the dollar may appreciate later this year as speculation heats up regarding the timing of an exit policy to the Federal Reserve’s quantitative easing measures.
As I have mentioned several times here, we often see data from the US and US Dollar movements directly affect Sterling. Why is this? Well, USD is seen as a safe haven currency. When investors are worries about the global economy, or when there is bad news, we see investors flock to the dollar, which strengthens it and weakens other currencies such as Sterling.
When risk appetite returns, and there is good news from the US, you would expect it to strengthen the dollar. However, in turbulent times like we have now, good news from the states increases risk appetite among investors, and we see more move towards higher risk currencies such as the pound.
So where are rates headed?
In the short term, we may see the recent run in Sterling come to an end as more data is released by the Bank of England next week. If you have a requirement in the next 3 months, consider fixing rates now as the market is very uncertain.
Longer term, investors do expect the pound to continue rising, and rates should steadily climb to year end. this is medium to long term however.
If you are trading up to £10k, then you should open an online trading facility. You can view rates and purchase currency yourself 24 hours a day 7 days a week, and it’s very simple.
If your requirement is above £10k, then a normal trading facility will be best for you. This is where you place your order over the telephone, and we source commercial rates for you and you can lock in rates in just a few minutes.
Opening an account is free, does not obligate you, and give you the opportunity to have a discussion with a senior trader to help you get the best possile exchange rates. Get in touch today to find out more.
EU – Consumer Price Index
EU – Unemployment Rate
Canada – Gross Domestic Product
US – Gross Domestic Product
US – Personal Consumption Expenditures
US – Purchasing Managers Index
Enjoy your weekend…
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