Sterling forecast against the euro

The CBI yesterday announced that retail sales in January fell at their fastest annual rate, I think this coming so soon after the UK scraped it's way out of recession paints a pretty bleak short to mid term future for Sterling.

The fall can be partly attributed to both the rise in VAT as well as the big freeze the country suffered during the month which both affect peoples willingness and opportunity to spend.

This adds further fuel to the fire that the UK could be heading for a W-shaped or double dip recession - a situation where the economy could fall again, further, than it did a year ago - and who knows where exchange rates could fall to ....... below parity against the Euro? 1.20's against the Greenback? Not good!!

There is no reason why people shouldnt at least be considering the benefits of buying currency, or at least securing exchange rates using a forward contract at these recent highs.

To talk through your specific circumstances or to see what contract types we have available that suit you requirements email me at sah@currencies.co.uk or call me free on 01494 787457

Sterling forecast

Sterling has had a rocky 7 days on the markets and it looks set to continue with a number of interesting maybe more news based releases due to come out over the week.

Obviously the key one of the week is the U.K officially coming out of a recession yesterday, however we just crept out of one so good news on paper but in general there is still plenty to be done.

The Iraq inquiry is also set to be a very interesting time for the Pound as there will be some extremely heavy questioning, especially for Tony Blair, and with the U.K still having a Labour Government still in power this may lead to political uncertainty which in turn could bring Sterling weakness.

Canadian Dollar exchange rates

Yesterday we saw the announcement of the first Canadian interest rate decision of 2010 which was, unsurprisingly, left on hold at 0.25%. The central bank reiterated that the currency's continued strength was a real hindrance to economic recovery.

On the back of this announcement Sterling gained some significant ground, a welcome change for those looking to buy the Loonie.

In other news German ZEW investor confidence slid more than expected, denting the Euro, while UK inflation figures came out at 2.9% the biggest increase since records began.

This all led to a pretty good day for the Pound which ended up three quaters of one percent up against the single European Currency by the day close

Positive UK house price data

Rising buyer interest and low levels of supply pushed property asking prices in England and Wales up an annual 4.1 percent in January, according to property website Rightmove.

On a non-seasonally adjusted month-on-month basis, prices rose 0.4 percent, reversing part of December's 2.2 percent decline.

Search activity on Rightmove's website hit a record high in the first full week of the year with 157.4 million pages viewed, 26 percent higher on the same period a year ago.

Rightmove also warned that Government spending cutbacks and the potential of rising interest rates later in the year could hamper the upward momentum.

We have seen positive moves for Sterling against a basket of major currencies this morning on the back of this data release, sending Sterling Euro to a 3-month high and Sterling Dollar to it's highest level this year.

Australian Dollar update

Employment figures from Down Under yesterday came in slightly better than forecast and it will come as no surprise to anyone who regularly follows the Aussie Dollar to know that the currency is still going from strength to strength.

The figures showed that the number of those in work increased by 35,000 against an expected figure of 10,000 - significantly increasing the likelihood of an interest rate increase at their February meeting.

The Aussie Dollar gained 0.7% against Sterling by close of business yesterday and is up another 0.55% already today.

A currency who's countries interest rates look like they are about to increase will generally strengthen against economies who's interest rates are stable or falling so over the next few weeks we could continue to see gains for the Australian Dollar over Sterling, to make sure you are in a position to take advantage of this opportunity take 5 minutes to open a free no obligation trading account with Foreign Currency Direct plc by clicking here

Best exchange rates?

Sterling exchange rates rallied yesterday following positive results from both the industrial and manufacturing sectors. The good feeling was further assisted when Andrew Sentence, a member of the MPC (Monetary Policy Committee), hinted that UK interest rates might rise above the record 0..5% low before the end of 2010.

Further, a leading think tank the NIESR seemed to bring closer the prospect of the UK coming out of recession as they announced that their figures (although not official) indicated that the UK economy grew 0.3% in the 3 months to December 2009.

This all led to a real shot in the arm for the Pound, a trend which has carried on against most currencies this morning. For those needing to secure currency in the first part of 2010 this could be the window of opportunity you have been looking for. Call me free on 0800 328 5884 to get up to the second prices and find out what we can do to help you negotiate the market during these volatile times.

US unemployment still high

The US had a busy day on Friday with both unemployment and Non-Farm roll figures released. It proved to be a very volatile day for the GBPUSD pairing as Unemployment remained unchanged at 10% and Non-Farm payroll very different from predicted. Since the recession began in 2007, 7.2 million jobs have been lost in the US. In 2009 alone, the economy lost 4.2 million jobs. This brought back fears of a double dip recession which could hugely affect future exchange rates.

Timing a transfer of £100,000 buying USD could have made you an additional $2,000 at the peak of the day. This in another example that keeping in close contact with your dedicated account manager here at FCD can provide a real benefit and create a real saving on your transfer.

If you do not have an account with us to take advantage of this spike simply click here to open a trading facility for either personal or business use. It carries no obligation or cost and gives you access to all the tools available to maximise any future currency exchange.

Positive economic news out of the UK rallies the Pound

Friday morning saw the first positive reports for the UK in 2010 with Product Price Index results coming in higher than expected. The price of goods leaving the UK rose 0.5% last month and took the annual rate of output to 3.5% which is the highest since January 2009.

These results published by the Office of National Statistics made a welcome change as the pound strengthened against a basket of major currencies in
morning trading, which for some pairings was the first time in 2010.

Quantiative easing set to increase

The is a distinct possibility that the MPC could increase the QE programme designed to reignite the flagging UK economy following their February meeting. In the past announcements of further funds being made available have caused Sterling to weaken significantly.

A spokesman for BNP Paribas SA said that Sterling could fall by as much as 12% against the USD this year as deteriorating public finances, concern the nation's credit rating may be cut and political discord deter foreign investment.

Political Instability

Yesterday saw Sterling take a tumble once again as Gordon Brown's leadership was put into question when two ex-cabinet ministers Patricia Hewitt and Geoff Hoon called for a secret ballot regarding party leadership only months before a General Election has to be held.

With two such high profile members of the Labour Party coming out in public like this it is a clear sign that the party is clearly divided.

Political stability (or lack of) is one of the 4 factors of the currency compass, the 4 driving factors behind exchange rate movements and direction.