27th October 2010
Good morning. Sterling rallied well yesterday following much better than expected economic growth for the UK, coupled with a vote of confidence by a credit ratings agency. Rates at 08:30am are as follows:
- GBP/EUR 1.1440
- GBP/USD 1.5768
- GBP/AUD 1.6260
- GBP/NZD 2.1147
- GBP/CAD 1.6239
- GBP/CHF 1.5595
- GBP/ZAR 11.051
- GBP/JPY 129.11
- GBP/NOK 9.3137
- EUR/USD 1.3777
Sterling gains on GDP data
It's certainly been a volatile week for the pound. On Monday rates against the Euro dropped into the €1.11's, however by today we are 3 cents higher at €1.1440. The reason for the remarkable turnaround is better than expected Gross Domestic Product.
GDP is a measure of the total produced by the UK, and this increased by 0.8% according to figures released yesterday. Most analysts only expected a 0.4% gain, and so the economy grew by twice than forecast.
The pound immediately gained against other currencies, and markets now see the pound as less of a risk than they did on Monday. It's likely the better figures will delay another round of Quantitative Easing and this has strengthened Sterling.
Ratings Agency vote of confidence
The government's planned cuts in its Spending Review got a stamp of approval from ratings agency Standard & Poor's, which raised its outlook for the UK's triple-A rating back to "stable" from "negative".
"In our opinion, the decisions reached by the United Kingdom coalition government in its 2010 Spending Review reduce risks to the government's implementation of its June 2010 fiscal consolidation programme," the company said in a statement.
Good news for the coalition, and good news for anyone needing to buy currency with Sterling, as rates have increased around 2.5% since Monday.
Summary
There is much uncertainty surrounding the UK economy, but at the moment things are looking brighter. This week really does illustrate how quickly things can turn around, and how a data release can quickly push rates one way or the other.
It's still very unclear which direction rates will take in the medium to long term, so if you need to buy or sell foreign currency contact us today for a free consultation.
We can explain the different types of contract available, and help you achieve exchange rates that can be up to 6% better than available at the banks.
If you are looking for the best exchange rates, click the link below to send us an enquiry, and have a free consultation on what's happening in the currency markets.
Labels: GDP Figures, Sterling Forecast