GBP/USD
Sterling has rallied this morning, and the rate for buying dollars is now at a 5 month high, in fact the highest we have seen all year. Since november last year, this currency pair has been trading between 1.35 and 1.55 - if the rate pushes a bit more and goes back through the 1.55 resistance level, then we could see the break last.
GBP/EUR
Again we have very good buying levels for the Euro. Purchasing €100k today compared to at the beginning of the year would be a staggering £11'000 cheaper, so the strength of the pound right now is something that clients who need to purchase Euros need to consider taking advantage of. Sterlings spike this morning has pushed the rate very close to the best we have seen all year, as confidence in the pound has seemed to return, but the question is for how long.
What next for the pound?
Today we do have some important measures of the UK economy. Namely the Consumer Price Index and Retail Price Index. This is a good measure of inflation in the UK, however with our interest rates already at 0.5%, there is little room for the Bank of England to move things much. So, should the figures we worse than expected with no tool in the banks armoury to combat it, then the result could potentially be the recent surge in the pound being reversed.
It's always impossible to predict exactly where exchange rates will move, however the current buying levels are very attractive. If you need to buy Euros or Dollars in the coming months, then you could either gamble that rates will continue to rise, or if you prefer a bit more certainty then you could purchase now and take advantage of the current rates.
Different Options
If you do decide to gamble, then use a currency tool such as a Limit order - let's say you hope the rate will get to 1.15 on the Euro. You can place a limit order with FCG to automatically fix your rate at that level should it reach it. At the same time, it is wise to have a safeguard in place in case your gamble does not pay off. This safeguard is a StopLoss order.
For example you could place this at 1.10, so that if the pound plummets, you know the maximum your Euros will cost you and you wont be leaving it to chance. To discuss these type of tools, open an account today and you can have a free consultation as to your requirements and options available to you.
Factors influencing exchange rates
The government has been embroiled with the expenses scandal of late, however this has had little if any impact on the value of the pound in the currency markets. With little data released yesterday, the movements up for the pound were caused by rising stocks. The Euro continued to weaken also on the back of the poor data from Germany and the EU.
The view is that we have had so much bad data from the UK recently, and the worst is yet to come from the EU. Beware however, as with lots of UK data this week such as todays inflation data, tomorrows Bank of England minutes, and Retail Sales and government spending later in the week then really anything could happen. The rally could continue, or indeed we could see the pound retract.
Whether you are buying currency with Sterling, or indeed selling a foreign currency back to Sterling, then you need to make a decision what to do. If you're buying, then rates are close to an all year high. If it was me I wouldnt take the risk and I would get the rate fixed.
If you are selling, then of course the risk is the rally continues. it's important to remember that even though rates are at an all year high for EUR and USD, they are still so much better than they have been in recent years. In such volatile times, it's a brave person who does nothing and just wishes the market will move in their direction. Hardly a reliable tool when transferring large sums of money.
Get in touch today for a proper discussion on the different options and contract types available at FCG to help you achieve the best possible rates.
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