Why is the pound weak when the EU and US are in trouble?
This is a question I am often asked by clients, as the world is in recession and most economies are facing difficulties, why is Sterling so much weaker than the Euro and US Dollar.
Well, interest rates, unemployment and quantitative easing all have an impact, this biggest driver us GDP or Gross Domestic Product - measure of a country's economic activity, namely of all the services and goods produced in a year.
The UK government is now predicting that the economy will continue to decline through most of 2009 but recover in 2010. However, the IMF are predicting it to continue to contract throughout 2010 and have also forecasted that UK GDP will be much worse than the EU or US.
This combined with the UK taking a unique approach in 'creating money' through quantitative easing, means investors are not confident in the UK, and so are moving investments and funds to the USD and EUR to protect themselves.
The net result? A very weak pound and lower exchange rates. You only need to read the headlines in the papers day to day to know that the economic downturn, and thus Sterling weakness, is likely to continue for some time. If you have a requirement to purchase currency, dont get caught out in a volatile market. Speak to FCG today to discuss options available to you.
Data Releases Today
German ZEW Survey, is a measure of economic sentiment and measures the institutional investor sentiment, reflecting the difference between the share of investors that are optimistic and the share of analysts that are pessimistic.
Data Releases Today
German ZEW Survey, is a measure of economic sentiment and measures the institutional investor sentiment, reflecting the difference between the share of investors that are optimistic and the share of analysts that are pessimistic.
As Germany is the largest economy in the EU, this is viewed as an indicator of how the economy is performing. The figure is expected to be -7.8. Any less than this and we may see GBPEUR exchange rates drop slightly.
US - this afternoon we have the Producer Price Index which measure changes in prices in goods both monthly and annually. Again this is a good indicator of the US economy so may cause exchange rate changes.
UK - Some house price data, but in recent times news in the financial sector is likely to have the biggest impact on Sterling today, along with tomorrow auction by the Bank of England where more money is expected to be created and pumped into the economy.
Tomorrows data
Tomorrow is a very busy day for data releases, with key data from Japan, USA and UK all likely to impact heavily on exchange rates. Check back for tomorrows post for a detailed report on the impact these releases may have on your currency requirement.
House Prices Down
Asking prices for houses in England and Wales were 9.0 percent lower than a year ago this month, slightly less than February's record 9.1 percent annual drop, property website Rightmove said on Monday.
Average asking prices rose by 0.9 percent in March, less than the usual increase for the time of year, and new listings were 57 percent lower than last year at 79,000, Rightmove said.
As the chart shows, house prices have fallen dramatically over the last 18 months. This has contributed to Sterling weakness and lower exchange rates.
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
US - this afternoon we have the Producer Price Index which measure changes in prices in goods both monthly and annually. Again this is a good indicator of the US economy so may cause exchange rate changes.
UK - Some house price data, but in recent times news in the financial sector is likely to have the biggest impact on Sterling today, along with tomorrow auction by the Bank of England where more money is expected to be created and pumped into the economy.
Tomorrows data
Tomorrow is a very busy day for data releases, with key data from Japan, USA and UK all likely to impact heavily on exchange rates. Check back for tomorrows post for a detailed report on the impact these releases may have on your currency requirement.
House Prices Down
Asking prices for houses in England and Wales were 9.0 percent lower than a year ago this month, slightly less than February's record 9.1 percent annual drop, property website Rightmove said on Monday.
Average asking prices rose by 0.9 percent in March, less than the usual increase for the time of year, and new listings were 57 percent lower than last year at 79,000, Rightmove said.
As the chart shows, house prices have fallen dramatically over the last 18 months. This has contributed to Sterling weakness and lower exchange rates.
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