Tuesday 1st November 2011
Good morning. Sterling has surged against the Euro, rising by nearly 3% since last week, and has now sitting in the mid €1.16's. The Pound is being driven by external factors: investor perception about the US Dollar and Euro, in addition to the intervention by the Japanese has pushed the dollar higher and strengthened Sterling. At 08:30am this morning rates are as follows:
• GBP/EUR 1.1666
• GBP/USD 1.5967
• GBP/AUD 1.5445
• GBP/NZD 2.0027
• GBP/CHF 1.4192
• GBP/CAD 1.6138
• GBP/ZAR 12.851
• GBP/JPY 124.68
• GBP/DKK 8.6811
• GBP/NOK 9.0108
• EUR/USD 1.3687
Sterling rises against Euro November 2011
The Pound has risen well against the Euro so far this week, with European markets opening lower this morning, following an announcement yesterday on a Greek referendum on the latest aid package to solve its debt crisis. Eurozone leaders had agreed a €100 billion loan to Athens and a 50% debt write-off last week, however the announcement of a referendum has cast doubt on whether the deal will be able to go ahead.
This has weakened the Euro, and made it cheaper to purchase. Sterling vs Euro exchange rates have surged as a result, and we are now sitting not far from €1.17, when only last week rates nearly dropped into the €1.12's.
If you need to buy Euros, you should consider locking in the current rate with a Forward contract. this is where you can lock in the current rate for up to 2 years, but only lodge 10% of the total amount of Sterling you need to convert. You will then be protected against a drop in rates. Click here to send us a free enquiry about Forward Contracts.
UK Gross Domestic Product today
This morning at 09:30am we will see the UK's GDP figures. This will show how the economy is growing and we expect a 0.3% gain in the 3 months until September. If the figure is lower than this however, then expect Sterling exchange rates to drop.
The other concern is further Quantitative Easing by the UK. This could also weaken the Pound, and so we think the gains in GBP/EUR will be short lived, making it even more important to contact us to discuss forward contracts if you need to buy Euros in the next 6 months.
US Dollar weakens
US brokerage firm MF Global has filed for Chapter 11 bankruptcy protection after revealing £4bn of eurozone debt exposure. MF Global worried markets last week after disclosing a $191.6m quarterly loss. This saw its shares fall by two thirds, and its credit rating cut to junk.
The result for exchange rates is the Dollar weakened pushing GBP/USD rates higher, however the issues in Europe have now swung the pendulum the other way: weakness in the Euro drives investment towards the US Dollar, and this has created strength this morning pushing rates back below the $1.60 mark.
Today's Data
Australia releases House Price data and there is also an interest rate decision. In the UK we will see Gross Domestic Product figures – these are important as it shows at what rate if any the economy is growing. There is some minor construction data from the USA.
Getting the Best Exchange rates
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