Today the GBPEUR pair moved out of its range over the last 7 days helping people buy the Euro at a cheaper price. Earlier today UK PMI figures for the services sector, one of the largest sectors in the UK economy, showed a surprising improvement. This pushed the strength of the Pound up and has created this opportunity, the best price to buy in 3 weeks. The next question everyone asks is whether this is going to continue? My thoughts are is that there is a lot more risk of rates falling rather than climbing.
Over the next few trading sessions we have two key events from the UK which could follow the path of data so far this year for the pound. Sir Mervyn King, the Governor of the Bank of England speaks tomorrow morning followed by the Interest Rate decisions of the EU and the UK on Thursday. Sir King is more often than not negative for the Pound and in their last meeting to decide rates of Interest in the UK a 1/3 voted for more QE. (QE is the printing of money to help boost the economy, unfortunately as more money is printed its value traditionally falls.) As a result if you are in the position needing to buy currency with Sterling in the next few weeks I think it’s wise to move before these releases, or at least, hedge your bets by using Stop-loss and Limit orders. These are contract options available from most currency brokers, but don’t think they are all the same. (Costs vary so make sure you compare these with ourselves to get the best price.)
Most currency experts are thinking GBPEUR rates will fall along with GBPUSD. Some forecast GBPEUR to fall as far as parity by the end of the year and the dollar down towards 1.40. I can understand their views but think it’s very difficult to put a forecast in for that far in advance, it’s like guessing the lottery numbers, however nice that would be. I do however believe there is far more probability that rates will fall across the board for sterling over the next 30 days. I would hope that most agree as we see Unemployment Climb, Inflation Climb, our AAA credit rating be downgraded, Growth Forecasts slow and the prospect of another
recession in the UK.
If you have a currency transfer to complete make sure you are getting the best price by shopping around, like you would for any financial product. Contact me, (STEVE EAKINS) if you want to see how much we could save you. Call on the normal number or via email at email@example.com