Good morning. The pound rose yesterday to a new 19 month high against the Euro, hitting €1.2222 which is the highest since the aftermath of the financial crisis in 2008. Sterling also rose against the US Dollar, but not as much. The gains were short lived and we're back to €1.21 this morning. Rates at 08:30am 25th June 2010 are as follows:
Why did the pound rise against the Euro June 2010?
It was partly due to the increased confidence in the UK following the budget and positive comments by the ratings agency Moody's, as covered in yesterdays post. Mainly though, it was due to weakness in the Eurozone. Markets continue to worry about the EU debt crisis. Investors are concerned about the strength of their economies, and the Euro weakened as a result.
The revival of Sterling is mainly due to the Euros fall, and it's notable that the pound has not enjoyed a similar rally against the dollar. This illustrates that it's Euro weakness more than Sterling strength that caused yesterdays surge.
G20 meeting
Leaders of the richest nations meet today in Canada for 3 days. The main focus will be discussing the problems in the EU, and recovery from the financial crisis. You can read a report on the meeting here on the BBC site.
Any announcements could cause volatility in rates. If a clear plan is agreed to assist the EU that appeases the markets, the currency could strengthen and GBP/EUR rates could fall back away. If however no clear plan is agreed, and investors remain wary of investing in the Eurozone, we could see the Euro continue to remain weak and good buying levels remain.
When should I buy my currency?
Regardless whether you are buying or selling a foreign currency, the volatility in the markets at the moment could either present spikes for or against you. Getting your timing right could mean significant savings if you need to transfer a large sum. It's impossible to predict where rates may move in the coming weeks, so how can you ensure you don't lose out?
The key way is with a Stop Loss order. This works by placing an order to purchase currency should the rate fall below a pre-agreed level. In this way, you can still take advantage of any market movements in your favour while protecting against a move the wrong way.
As markets move your way, you can amend your Stop Loss level in line with the market. This way you can only gain from positive movements and won't lose out should things go the wrong way.
To discuss how to place these types of orders, click the links below and contact us today.
Have a great weekend.
Labels: Foreign Exchange, FX Stop Loss Order, Pound Euro Forecast