Sterling Euro Exchange Rate Forecast

Last Weeks Trading Summary
Sterling fell to a 1 week low against the US dollar on Friday, after data showed the UK suffered the biggest contraction in economic growth since 1980 in Q4 2008.

The figures showed the economy contracted by 1.6 percent. This was unexpectedly revised down from the previous 1.5% fall, while the annual rate of decline was also revised down to 2%.

Sterling gained against the euro, however, which came under broad pressure after German finance minister Peer Steinbrueck said fiscal irresponsibility in Europe could put the euro's stability and credibility at risk. The weakening of the Euro on the back of this is what caused rates to rise slightly.

"Sterling is being caught in cross currents at the moment," Standard Chartered senior foreign exchange strategist Rob Minikin said. "It continues to be vulnerable, but it is difficult to assess how to play that vulnerability, whether it should be against the dollar or against the euro," he said.

So, hard to read what the next few weeks may hold for Sterling exchange rates. The G20 summit and all the economic data that will be released this week will likely have a big impact.

G20
The Group of 20 of the world's most powerful countries meets this week in London for a 1 day summit that aims to boost confidence that global leaders are united in tackling the world economic crisis. Some of the key issues that will be discussed are Reviving the world economy, restoring bank lending, agreeing tougher rules for banks, a bigger role for the IMF and also giving more help to developing countries.

We will watch developments very closely, as the outcome of this meeting will be highly likely to affect the value of the worlds major currencies.

UK Banks
Nationwide have announced they will take over the Dunfermline Building Society in Scotland. This is in addition to merging with the Co-operative Bank. In the current climate it seems Nationwide are positioning themselves fairly well, although I doubt the turmoil in the banking sector is over yet for the UK.

Also, Tesco has announced plans to open 30 bank branches in its stores by the end of this year as it expands its personal finance brand. There has been a trial in Glasgow since 2006 and new branches will open next month in Blackpool, Coventry and Bristol. Tesco currently offers insurance, credit cards, loans and savings accounts and plans to start offering current accounts within two years.

Good to see some positive news for UK banking, as the finance sector has been hit with lots of job losses lately, and dont forget finance is one of the largest parts of our economy. One reason the pound has fallen further than other currencies recently.

This weeks data
Lots of economic data this week. Lots of data from all major economies, and depending whether the figures come out above or below expectations will determine the value of one currency against another. Lots of data so expect lots of volatility this week. Below is a summary of data for each economic zone this week.

United Kingdom
Money Supply
Mortgage Approvals
Consumer Confidence
House Prices
Manufacturing

European Union
Economic Confidence
Consumer Confidence
Industrial Confidence
Consumer Price Index
Purchasing Managers Index

United States
Consumer Confidence
Construction
Home Sales
Non-farm Payrols
Earnings Data

If you are looking to make a transfer abroad, and would like to find out more about Foremost Currency Group, then simply click on the link below to visit our main site.

Just got a question? Click Here to Send me an Email

Foremost Currency Group