Good Morning. The pound has fallen quite a bit overnight, after yesterdays GDP data showed that the UK is the only major economy still in recession. At 08:30am pound exchange rates are as follows:
- GBP/EUR 1.0971
- GBP/USD 1.6556
- GBP/AUD 1.7971
- GBP/NZD 2.2914
- GBP/CAD 1.7407
- GBP/CHF 1.6560
- GBP/ZAR 12.197
- GBP/JPY 143.72
- EUR/USD 1.508
Sterling Falls again
Sterling fell this morning, losing more than 1% against the US Dollar while the pound also fel against the Euro, hitting a 1 month low as it remained under pressure in the wake of Wednesday’s gross domestic product data.
The data showed the British economy shrank by 0.3 percent in the third quarter compared with the initial estimate of a 0.4 percent contraction. This came as a disappointment to some who were looking for a bigger revision and it exacerbated concerns that the UK economic recovery is lagging that of other major economies. So, the figures were not as good as some analysts had expected, and so this is the main reason for the dip in exchange rates.
The new figures confirm the economy has contracted for six consecutive quarters – the longest unbroken stretch of since records began in 1955. The UK is lagging many of its rivals. France, Germany Japan and the US have all already exited recession.
Earlier on Wednesday, Bank of England monetary policy committee member Andrew Sentance said there were signs the UK economy had returned to growth in the second half of this year, however the markets have reacted and Sterling has lost a significant amount of it’s value.
Given our huge debt levels, and concerns over the banking sector mean there’s little hope the pound will rebound any time soon. Many analysts are expecting the pound to remaind weak until at least the General Election next year. If you have a requirement to purchase a Foreign Currency with Sterling, then you should consider fixing rates now. Even if your currency is not needed for some time, you can pay a 10% deposit and lock in a rate for the full amount you need, for up to 2 years into the future.
This will protect you against further losses, and give you peace of mind knowing what your currency will cost you.
The US dollar has hit a 14-year low against the Japanese yen with low interest rates in the US making the greenback less attractive to investors. The dollar slipped to 86.5 yen, its lowest level since July 1995.
The US has indicated it is unconcerned about the dollar’s slide, and will not intervene to strengthen it. Many traders are swapping dollar holdings for gold as a safer investment in the current uncertain economic climate.
Usually the pound benefits from this type of news, but for the reasons already listed above, not many people are interested in investing in Sterling right now.
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