As I outlined in my most recent post, the Sterling/Euro exchange rate is now well below the recent 8 year high of above €1.40. It has fallen a further cent today to around the €1.37 mark, following positive comments about the EU econmoy this morning from the ECB president. Despite the drop in Euro rates however, many currency pairs are trading at their best in nearly a decade. So today I thought I would give a quick overview of some of the main currency pairs I trade, specifically GBP/USD, GBP/CAD, GBP/AUD, and GBP/EUR.
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This week is the most anticipated of the year for Sterling/Dollar, and it’s widely expected that the US Federal Reserve (FED) will raise interest rates in the USA on Wednesday evening. If they do, then the Dollar could gain strength and become more expensive to buy. It’s impossible to know by how much this is already priced into the market of course, but I wouldn’t be surprised to see this pair drop below $1.50. If you need to buy US Dollars, get in touch to discuss ways to protect against a sharp drop in the rate.
As you can see from the chart, this exchange rate has shot up recently to an 8 year high. This is due to low oil prices, as Canada exports lots of oil and the decline in oil prices has weakened the CAD, making it cheaper to buy. There is a speech by their central bank chief tomorrow, and at the end of the week there are some inflation numbers, but oil prices will continue to have the most effect. Given the price is at rock bottom and the GBP/CAD is so high, those that need to buy CAD could consider placing a ‘Stop Loss’ order to protect against the excellent rate dropping away.
This currency pair is also trading at around an 8 year high, and it’s due to weakness in the AUD. They export many raw materials to China, and as the Chinese economy has slowed, so has the demand for these materials. As such the AUD has weakened and become cheaper to buy. We have speeches by their Reserve Bank this week in addition to their recent minutes to their interest rate decision. I don’t expect rates to be changing any time soon, so those buying AUD could consider taking advantage of the record rate while you can get more than $2 to the pound.
This is the currency pair I cover the most on my blog, as it makes up about 70% of all the trades I do for clients. As regular readers will know the pair was recently at an 8 year high, but has now fallen back away. The average for 2015 is about €1.37 so it’s still actually pretty good and the current mid-market rate is around the €1.37 mark. Many clients make the mistake of holding out for an inch, and risk losing a yard. It may get back to €1.40 again, however just a few months ago it was as low as €1.33, so you need to decide whether you’re happy to take the risk of holding out for gains in the rate, and decide whether you could afford the rate to tumble back down again. There are various ways you can protect against such a drop while still allowing yourself to take advantage if the rate goes back up, so if you need to buy or sell Euros, click here to discuss the options i can offer you.
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