Sterling Strengthens (GBPEUR outlook)
Sterling extended its broad rally on Monday, accelerating gains against the euro in particular after the European Central Bank chief said the euro zone finance system, like others, was under "severe" strain.
Currency traders said Jean-Claude Trichet's remarks prompted macro hedge funds to sell euros against sterling, while the pound's upswing also gathered steam against the broadly weak yen.
A weaker EU economy means the currency (EUR) also weakens and therefore becomes cheaper to purchase. Levels are already 12% higher than at the beginning of January, making a €150k purchase over £17k cheaper.
Yesterdays news follows Sterlings gains on Friday against the euro on Friday thanks to a surprise rise in UK retail sales last month that suggested there's still life in the British consumer.
Given the expected poor performance of the UK economy for the coming year however, these levels may not last for long. Consider taking advantage of the current rates while they are available. Get in touch today to find out how to lock in todays rates for a small deposit, even if you dont need your currency for some time.
CKZ / HUF / PLN
The central banks of Poland, Hungary and the Czech Republic have issued statements saying recent falls in their currencies were unjustified. The four countries' currencies have fallen sharply against the euro in recent weeks amid concern about the effects of the economic downturn.
The banks said they would consider taking coordinated action to defend their currencies.
But there were no details of what action they would take. The countries' currencies and stock markets fell last week after the ratings agency Moody's warned that economic conditions in the region would hit local subsidiaries of major western banks.
"In the view of the National Bank of Poland, the macroeconomic situation does not justify such a degree of weakening in the zloty's rate," the governor of Poland's central bank said. All four statements made similar such statements.
Steps generally taken to strengthen currencies include using foreign currency reserves to buy your own currency or raising interest rates, though that would be a risky strategy in a downturn. This does mean if you require any of these currencies, the weakening has resulted in better buying opportunities than of late.
Todays Data
German IFO Business Climate -German business sentiment index published is closely watched as an early indicator of current conditions and business expectations in the Euro Zone. The Institute surveys more than 7,000 enterprises on their assessment of the business situation and their short-term planning. The figure is expected to be 83.1, any difference when announced at 9am will affect GBPEUR rates.
Also lots of US data due to be released this afternoon including Consumer Confidence, manufacturing Data, and a speech by the FED Chairman Ben Bernanke. Get in touch to find out how this may affect you if you have a requirement to either buy or sell US Dollars.
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Labels: EUR, Exchange Rate Forecast, GBP, Sterling Outlook, USD