Sterling exchange rates have had a volatile time posting seven consecutive days of losses against the Euro and reaching its lowest level against the single currency since October 2011.
In contrast in the past the pound has seen some significant gains, notably 5% against the Australian Dollar with the market testing 1.70 for the first time since September 2010 and bringing gains this year alone to over 15% in a little over three months – is this the time to buy the AUD?
Against the US dollar rates are hovering between 1.51-52 after hitting 1.54 in July. Levels have slipped in the past few days. However, in my opinion, current levels still represent value when compared to the year low of 1.4830 seen just three weeks ago.
GBP/EUR
Mark Carneys influence has been pretty significant following his appointment as the head of the Bank of England. In his first meeting in July he was to indicate that interest rates are likely to remain low for some time and that QE is to stay on hold for the time being.
Again very little was to come from yesterday’s meeting with the bank adopting the same stance as July, but it nowmakes next Wednesday’s inflation report at 09.30 all the more important as it is expected that the MPC will make an announcement about whether it will adopt a policy of “forward guidance”, a ploy that gives clues about future moves and helps investors to plan ahead. This could cause big moves for sterling across the board.
As with the Bank of England very little was to come from the European Central Bank with the base rate remaining on hold and head of the ECB Draghi indicating this would be the case for the foreseeable future.
Draghi’s move was seen as to reassure markets that the ECB is not ready to follow the US Federal Reserve towards withdrawing or “tapering” emergency stimulus. This is likely to keep the Euro strong and I would expect levels to possible shift lower testing 1.13.
GBP/USD Exchange Rates
For me I believe the current levels for cable represent a good buy opportunity. With signs the US economy is very much on the up (indicated by much better GDP results on Wednesday) this to me suggests the FED may well go ahead with the ‘tapering’ of QE. Bernanke had quelled rumours in previous weeks that the FED will continue with this stance by suggesting it will adopt and wait and see approach to see if economic data continued to show improvement. With little to suggest otherwise, I believe the FED will continue as planned in September and I would look for a move below 1.50, possibly testing the 1.48 levels seen in early July.
Anyone with an interest in the dollar short term should watch out for non-farm payroll data this afternoon. Official figures are released at 13:30 – these are expected to post a loss which could create some good buy opportunities this afternoon.
Will the RBA cut rates?
As discussed previously the pound has had somewhat of a resurgence against the Aussie, shifting 9 cents in less than a month. This makes a difference of AUD 18,000 on a £200k transfer between the high/low during this period. The big move was seen on Tuesday when RBA Chairman Glenn Stevens gave strong indications that interest rates could be cut next Tuesday. For me this has been heavily priced in and Aussie buyers run the risk of a big shift back in favour of the Aussie should they decide against cutting next week.
Should you have an upcoming exchange to arrange and you would like to discuss the currency service we provide then please get in touch. Our aim is to supply our clients with information to assist them with their money exchange. It is impossible to guarantee the best time to exchange but by giving yourself as much information as possible it puts you in the best position to make an informed decision. Our currency service is geared towards private and corporate clients and simply we are here to get you the best market price we can. To test the service or to get a live quote contact the office on 01494 787478 or email Mike at mgv@currencies.o.uk and I will happily discuss current trends and see if I can save you money on your currency transfer.
No comments:
Post a Comment