Friday 29th November 2013
Good afternoon everyone. A quick update before the weekend to outline what’s been happening with exchange rates, and in particular the Pound/Euro exchange rate forecast.
BoE Governor causes Pound to rise above €1.20
Yesterday the governor of the Bank of England, Mark Carney, gave a speech. You can read a report here on the BBC website that outlines what he talked about. Most of the press has been reporting on the move of the ‘Funding for Lending’ scheme which has been moved from individuals to small business.
What we’re interested in however is what effect his words had on exchange rates. Mr Carney’s predecessor Mervyn King had a habit of ‘talking down’ the Pound to such an extent that usually as soon as he opened his mouth, Sterling fell before he had actually said anything!
Mr Carney in contrast seems to do exactly the opposite. In recent speeches his comments have been very UK positive and have therefore caused the Pound to rise. This is what we saw yesterday, and the Pound rose to over €1.20 again against the Euro, but this time rates remained just above this level all day on Thursday.
What’s happened today to Sterling exchange rates?
Today, Sterling slipped from a 11-month high against the dollar and fell against the single currency as investors digested the Bank of England’s surprise move to scale back stimulus for the housing sector.
Initially, investors had concluded the Bank might be taking the first step towards tightening its ultra-loose monetary policy, and the pound rose. But some analysts said not using conventional monetary policy to curb housing prices meant interest rates could remain low for longer.
However in the last few minutes, Pound/Euro has shot up to €1.2022 and Pound/Dollar has risen to $1.6364. I put this down to profit taking: as the European markets closed at 4pm a few minutes ago, investors wound up their positions ahead of the weekend, causing a spike in the value of the Pound:
- So will these levels now be sustained against the Euro?
- Will rates drop back away as they have been doing over several weeks?
I’ll be back in action on Monday with a full analysis and round up of the future forecasts for exchange rates.
In the meantime, if you’re looking for the best exchange rates, or would simply like to discuss the current market to help you decide when to convert your funds, then send me a free enquiry.
The rates I can help you achieve can be up to 5% better than banks and other financial institutions, so by getting in touch you can save yourself a considerable sum.
I look forward to hearing from you. Have a great weekend.