Good morning. Rates remained fairly flat yesterday, with little movement. Markets seem to be waiting for developments in the EU, and of course the upcoming budget in the UK. Today we'll look at the security side of trading with a currency broker like the Foremost Currency Group, and a quick look at some news regarding the Chinese Yuan. First, the usual snapshot of rates:
Why has the pound dropped against the Euro?
The Euro has gained strength after a Spanish bond auction soothed worries about the country's finances. A stronger currency is more expensive to purchase, and so rates have dipped slightly. Despite the Euros advance, analysts said worries about Spanish banks remain and the market will be looking for the results of bank stress tests which the Spanish central bank said would be published soon.
It's really about which currency is weaker at the moment between Sterling and the Euro. The Euro is weak due to debt problems, and the pound may weaken after the budget if cuts are more than expected. Depending which currency is seen as more attractive to investors will drive rate movements over the next few weeks.
We don't trade the Yuan, but the World Bank has reiterated its view that the Chinese government should allow the yuan to strengthen against other international currencies.
The bank said a stronger yuan would help to reduce inflation and encourage domestic consumption in China.
At the moment it's linked to the USD which is keeping it artificially weak. I mention this today, as if this does happen, it will affect importers and exporters. Also, China holds huge USD reserves and so if they sell any off, it could weaken the USD.
Security when using a currency broker
I mentioned in yesterdays post about the security of your funds when using a broker. It's very safe and secure to use a currency broker, and you can read a full outline of the measures in place to ensure your funds are safe in an article I wrote yesterday. Click here to view.
A quieter day on the markets data wise. Some inflation figures from Germany and mortgage approvals from the UK are the only data releases of note.
If you need to buy or sell a foreign currency, and would like to get the best exchange rates, make an enquiry with us today.