Friday 19th August 2011
Good morning. Sterling rose well against the Euro yesterday, as investors perceived the Pound as the best of a bad bunch of currencies. As markets around the world plummeted on risk fears, Sterling gained and GBP/EUR rates are at a near 2.5 month high. At 08:30m this morning rates are as follows:
• GBP/EUR 1.1531
• GBP/USD 1.6500
• GBP/AUD 1.5916
• GBP/NZD 2.0061
• GBP/CHF 1.3028
• GBP/CAD 1.6325
• GBP/ZAR 11.881
• GBP/JPY 126.05
• GBP/DKK 8.5886
• GBP/NOK 9.0377
• EUR/USD 1.4304
Sterling gains significantly vs Euro
Yesterday markets across the world fell, with the biggest fall on the FTSE since the financial crisis began. We saw a flight from risk, where investors were jittery and moved their funds to perceived safe havens. Usually this means the US Dollar and Swiss Franc, however with problems in the US and the Swiss keeping their currency weak, Sterling benefited.
So Sterling is gaining support from the perception it is the best of a bad bunch of currencies. We have stable credit ratings, political calm and a deficit reduction plan in place. This meant GBP exchange rates gained, particularly against the weaker Euro, still reeling from failures of EU leaders to reach an agreement on sovereign debt.
So is Sterling going to remain strong?
Many are questioning the Pounds buoyancy at the moment, as the UK economy is far from healthy. Just this week we’ve had poor Retail Sales figures, higher than expected unemployment, and dovish minutes from the Bank of England. Due to this, many analysts think that these gains will be short lived.
The government’s fiscal austerity programme is also expected to hamper demand in the economy, leaving sterling vulnerable to weakness in the medium term.
Best time to buy Euros?
Well it’s certainly close to the best in well over 2 months, and given the uncertainty surrounding the world economy, those that need to buy Euros should consider fixing the rate while it’s so good. Even if you don’t need your funds for some time, a Forward contract allows you to fix today’s rates for up to 2 years, and only lodge 10% of the total to be converted. Contact us today to discuss our exchange rates and how these contracts work.
We end the week with Public Sector borrowing from the UK, and further inflation figures from Germany.
If you need to buy or sell foreign currency and are looking for the best exchange rates to buy Euro / US Dollars, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.