Pound falls – Pound Sterling Forecast June July 2010

Good morning. Sterling has dropped across the board also after dovish comments from Bank of England chief Mervyn King, and exchange rates are lower this morning. His comments about inflation control weakened the pound. We’ll look today at events that will determine where exchange rates may move during June and July.

The main news going forwards is the meeting with EU leaders regards the debt crisis, the looming budget, and the news that the new Chancellor will give the Bank of England the key role in regulating the UK financial sector. Rates at 08:30am this morning are as follows:

  • GBP/EUR 1.1953
  • GBP/USD 1.4673
  • GBP/AUD 1.7031
  • GBP/NZD 2.1016
  • GBP/CAD 1.5072
  • GBP/CHF 1.6491
  • GBP/ZAR 11.156
  • GBP/HKD 11.426
  • GBP/HUF 335.01
  • GBP/JPY 133.77
  • EUR/USD 1.2271

EU Leaders meet to discuss debt crisis

EU leaders are to meet to tackle the challenge of getting economic growth back on track while reining in the worst public debts for decades. Leaders are intent on preventing contagion from the Greek budget crisis. This meeting could cause rates to swing either way. If a robust plan is agreed that gives the market confidence, the Euro could strengthen and rates could drop significantly. If however no clear plan is agreed, markets will remain wary and the Euro will remain weak.

It’s times like these that Stop loss and Limit orders are very useful. When markets are volatile, placing an upper and lower limit allows you to still aim for a higher rate should markets move in your favour, while protecting you from loss should the markets move against you. These contracts are suitable whether you are buying or selling foreign currency. Contact us today to discuss these types of contract further.

What will happen next in the currency markets?

In the short term, we see Retail Sales for the UK at 09:30am that could move Sterling exchange rates. In the medium term focus will be on the EU meeting, next weeks G20 meeting, and the upcoming budget by the new coalition government. We’ll look at how the budget will affect exchange rates next week.

Power to return to the Bank of England

George Osbourne has confirmed that the FSA would be broken up and the part that monitors financial institutions would continue as a “new prudential regulator” but would operate as a full subsidiary of the Bank of England. The parts that protect consumers and crack down on crime will be injected respectively into a new Consumer Protection Agency and an Economic Crime Agency.

He also said the government would create a powerful new Financial Policy Committee at the Bank of England. You can read a full report on the news here on the BBC. This ties in with questions we are often asked about the security of funds when using FCG to transfer funds abroad. We’ll take a detailed look at the measures in place that ensure your funds are safe in tomorrows post.

If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what’s happening in the currency markets.

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