24th November 2010
Good morning. Yesterday was full of surprises. Firstly the military action in Korea worried the markets and strengthened the US Dollar, pushing GBP/USD rates to a 1 month low. Versus the Euro however, Sterling hit a 2 month high due to the weak Euro on Irish uncertainty. Rates at 08:30am are as follows:
- GBP/EUR 1.1814
- GBP/USD 1.5779
- GBP/AUD 1.6127
- GBP/NZD 2.0760
- GBP/CAD 1.6101
- GBP/CHF 1.5689
- GBP/ZAR 11.190
- GBP/JPY 130.90
- GBP/CHF 1.5689
- GBP/NOK 9.6382
- EUR/USD 1.3355
Korea shocks the markets
North Korea shelling a South Korean island further dented sentiment in a market already worried about debt troubles in the euro zone, with participants seeking the perceived safety of the likes of the dollar. When there is global uncertainty, investors return to the ‘safe haven’ status of the US Dollar. As a result the USD strengthened and rates are now at a 1 month low for US Dollar buyers.
Sterling is still weak
The pound rose almost 1% against the Euro yesterday. Many think the pound is gaining but in fact Sterling is weak just as the Euro is. Contagion fears are keeping the Euro lower though, and that’s why rates have risen. The bailout of Ireland could be delayed due to political uncertainty, and that’s why the Euro is weak.
Further weakening Sterling were more negative signs on the state of the UK housing market, as the British Bankers’ Association said UK mortgage approvals fell to their lowest in more than 1-1/2 years in October.
For those looking to buy Euros, rates are at their best for 2 months. This is due to the Irish crisis, and it’s important to remember that Sterling is still fundamentally weak. Once the bailout is secured and markets feel better about the Euro, then rates will probably drop back away.
If you want to take advantage of the current levels, even if you may not need your Euros for some time, then contact us to discuss our Forward contracts. This is where you can lock in commercial rates with us today, for currency needed up to 2 years in the future. Only a 10 deposit is payable, and you then know exactly what your currency will cost.
For a client purchasing €150,000 with a Forward contract today, if rates were to fall back to where they were a few months ago, then you would have saved nearly £7000 – clearly illustrating the importance of timing your purchase right.
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.