Sterling/Euro & Sterling/US Dollar forecast 2010

Pound vs Euro
The past week has been rather volatile for the Sterling-Euro currency pairing with a 1.6% shift between the highs and the lows of the week. On Tuesday, data released pertaining to figures for both the Consumer Price and Retail Price Indices showed that inflation levels in the UK had contracted; giving strength to the Pound.

Wednesday presented a good reading for the Business Climate in Germany anticipating Bullish movement for the Euro. This movement was further compounded by Alistair Darling’s Budget report. Tory leader David Cameron stated, “This chancellor has had his last chance….he totally failed….they (Labour) are carrying on spending and failing. The biggest risk to our [economic] recovery is five more years of this prime minister.” This all amounted to a fall in the GBP/EUR rate.

Thursday presented the high of the week on the back of greater than expected retails sales data in the UK; peaking at 1.1242 before quickly falling back to previous levels. We also saw a financial aid package agreed for Greece at the end of the week, providing €22bn should the debt-laden country run into difficulties borrowing money to service its high debt levels. Whilst this did give the Euro strength against the Pound and Dollar, analyst Ulrich Leuchtmann of Commerzbank said “the agreement is, however, hardly reason for a significant correction.”

This volatility in the currency pairing highlights the benefits of placing a ‘Stop Loss’ or ‘Limit Order’ on a contract with FCG. Talking to your account executive and knowing where to place a minimum and/or maximum on your exchange rate would help to optimise your purchase. This would safeguard against any potential loss should the market drop and ensure that you are able to take advantage of any upward spikes (as on Thursday) without having to stay glued to the markets.

As we look to the week ahead, there is still a lot of uncertainty remaining for the GBP/EUR rate. The Germans hold many of the answers over the next few days. Yesterday, figures for inflation indices were released in Berlin, with no forecast for whether the rate will have changed over the last year, though a rise in inflation would be seen as positive and adding strength to the Euro.

Wednesday has data for unemployment change published by the German Statistics Office; with a rise predicted giving negative implications for consumer spending and subsequent economic growth.

As we approach the Easter weekend, German Retail Sales and Manufacturing Purchasing Managers Indices for both the Euro Zone and the UK are released. Whilst predictions are currently conservative with little growth predicted, it is worth stating the importance of a consultation with your account manager here at FCG.

With the distinct lack of certainty visible in the market, those with impending purchases in the Eurozone might look to consider booking a Forward contract with the Foremost Currency Group to eliminate any risk. By placing a 10% deposit, clients can eliminate the risk of a falling GBP/EUR rate by locking in a price today for a transaction that will take place in the future, up to maximum of two years.

Pound vs US Dollar
Last week saw yet another volatile week on the currency markets with Sterling ending the week down against the majority of major currencies.

The difference between the high and low point for the Pound Vs the Dollar was around 2.75% which in recent market conditions is erratic, but certainly not unusual. In monetary terms it represents a difference of around $8200 based on a £200,000 transfer which is a substantial amount of money and would have a certain impact on your requirement, regardless of your financial situation.

With regular contact with your account manager here at The Foremost Currency Group we can help to maximize your money saving potential on your exchange with information based on live market rates. This ensures that you conduct your transfer at the best possible time for you to maximise your buying efficiency.

To get yourself into a position to trade today and avoid any further negative movement against the dollar why not open an account by clicking here. An account with the Foremost Currency Group is obligation free but provides you with the facility to exchange your currency at the best rates at any time onwards from your account being opened.

The main news of the week came in the shape of The Fed Governor giving a press conference as to how the Fed observes the current U.S. economy and the value of USD. His comments have influenced the volatility of USD and may well be responsible for the current negative trend with regards to Cable.

His hawkish view is always considered as positive, or bullish for the USD, whereas his dovish view is considered as negative, or bearish for the Dollar, either way, in this instance his speech has impacted and strengthened the power of the dollar against GBP.

With the Quantitative Easing program only on hold at the moment it still leaves Sterling in a very fragile position as each month that passes, the likelihood for a further £25bn increase becomes that much higher a possibility. One of the tools available for those looking to purchase Dollars with fears of declining exchange rates is a forward contract. This is a contract set to protect clients from adverse market movement by locking in to an exchange rate today for anything up to two years in to the future with a small deposit.

Last week also saw the release of the consumer price index figures on Tuesday and this year’s budget report on Wednesday. Somewhat surprisingly, these releases had the potential to impact the markets heavily but we have yet to reap the full impact of what has been suggested. Alistair Darling didn’t seem to commit to any big changes in budget policy and as a result we are yet to see the full result of any of the changes.

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