Good Morning. The pound fell back to nearly 1.1450 against the Euro by close of play on Friday but has opened this morning at 1.1560, mainly due to more fears over Greece and the rest of the Eurozone. It is also back up above 1.5460 against the US Dollar. Rates @ 08:55am are as follows:
- GBP/EUR 1.1569
- GBP/USD 1.5470
- GBP/AUD 1.6649
- GBP/NZD 2.1488
- GBP/CAD 1.5442
- GBP/ZAR 11.380
- GBP/JPY 145.56
- GBP/CHF 1.6607
- EUR/USD 1.3364
Last week we witnessed a positive week for Sterling against the single currency with a 2.25% increase from the start of the week. The high point of 1.1619 was the highest level seen since January of this year and represented some excellent buying opportunities. The peak however was short lived after GDP figures for the UK on Friday showed a decrease to 0.2% for the first quarter of 2010 from 0.4% and the rate fell by around 1.25%.
Prior to Friday the main news that caused the markets to move last week were the Bank of England minutes where it showed all 9 of the committee members voted for a hold on the record base rate low of 0.5% and the continued pause to its Quantitative Easing program. This was followed by mixed results for the UK unemployment levels where it showed although unemployment rose to 8% the new claimant count was better than expected with a reading of -32.9k from a predicted -7.6k people claiming for unemployment benefit.
News from the Eurozone helped the spike for Sterling where it was announced that ratings agency Moody’s cut the Greek credit rating to A3 from A2. This makes the Greek economy now just one rating cut away from being uninvestible. There was also an upward revision to the Greek 2010 budget deficit to 13.6% of GDP by the European commission.
With so much seemingly pointing to continued Sterling strength the dip on Friday shows Sterling is still fragile and those with a requirement may wish to act on it now to protect from a potential downward trend. With the UK being at the mercy of opinion polls with the election drawing nearer, volatility is expected as uncertainty surrounding who if anyone will take power come May 6th.
The best way to protect your funds from market fluctuation whether buying or selling Euros would be with the use of a forward contract. This is a contract set up to buy your currency today for anything up to two years in the future with a small deposit. Contact us today to find out more information and discuss all of the tools at our disposal.
This week sees a limited amount of data releases with the main highlights being CBI realized sales for the UK on Tuesday and unemployment figures for Germany and the Eurozone as a whole on Thursday and Friday respectively.
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