Which Way For The Great British Pound?

Yet more volatility has ensued since our last weekly blog. The Pound has reached its highest rate against the Euro since 2008 and yesterday bought further data to add to the current melting pot of instability as both the Bank of England and European Central Bank released data and held press conferences. For those clients doing a GBP/EURO exchange, the rates are still very favorable with the rate being 1.2030 at 4pm this Friday 11th June. No one can be sure how long this will last or how long it may be before the Pound also weakens. Nick Clegg, the UK Deputy Prime Minister is due to speak in Madrid today about the effect that the Euro-crisis may have on the economy and is expected to label this as the biggest threat to UK recovery. Risk of recovery therefore is high on the UK agenda. Recovery is still weak, despite the enormous monetary stimulus of the "quantitative easing" program. Yesterday the Bank of England announced that interest rates have been kept again at 0.5% for the fifteenth month in a row being maintained at the same rate since March 2009. Inflation is also not looking good as it has accelerated to reach twice the Central Bank’s target rate. It’s not all bad news however as the housing market in particular is picking up. Housing data released last week revealed that prices are now within 10% of their 2007 peak. The strong talking we have been hearing from our new Prime Minister on budget cuts although austere is likely to boost the confidence of investors and suggest that the UK and the Pound are being decisively led. It is also important to remember that other nations around the world are at varying stages of recovery and the UK is not alone. The new Japanese Prime Minister has said that Japan’s ‘public finances have become the worst of any developed country’ and that a restructure is desperately needed to prevent the scale of their debt causing a Greek style crisis. On the other side of the coin, nations such as New Zealand are raising their interest rates since the onset of the crisis in 2008 indicating recovery. Unfortunately, the only certainty at the moment is uncertainty. The currency markets are seeing unprecedented amounts of volatility. If you need a foreign transfer for your property deal, make sure that you speak with us at Currency Solutions and manage your risk and maximize your profit effectively. This may include fixing a rate for the future, moving part of the total amount now and waiting to see how the markets pan out or setting automatic target rates and buying levels.