Another week and another swing in the rates.
Most significantly, the US Dollar fell against a basket of other currencies to its lowest levels since 2009 making this the best time to convert Pounds into Dollars this year. This was the result of the long awaited decision by the US Federal Reserve to try and re-stimulate the US economy by introducing more ‘quantitative easing’ measures – namely pumping another 600 billion Dollars into the economy. Anyone who needs a GBP/US Dollar transfer even if it is some way in the future would be well advised to speak with a currency broker about how they could lock into this great rate now. There have been a few signs that the US Dollar could begin to claim back some of its losses following stronger than expected data on unemployment on Friday so it is a good time to make a decision on how to handle your transfer. The US trade balance will be revealed on Wednesday and may have an impact.
The Euro has been steadily strengthening and dodging the spotlight recently with all the fuss over quantitative easing and the US claiming centre stage but this week has kicked off with something of a shift and the Euro beginning to weaken. Greek and Irish debt problems are firmly back on the agenda with a visit to Ireland today from the EU Economic and Monetary Affairs Commissioner to look over their budget plans. With no significant US data until Wednesday, the Euro may bare the brunt of currency movements in the early part of the week. There are some positive data releases to look out for, such as Germany’s widening trade surplus this morning, however this is serving to highlight the contrast between Germany and the other failing European economies.
Sterling has continued to strengthen against both the Euro and the US Dollar over the past week. Stronger than expected producer price data on Friday surprised analysts and showed the fastest rate of growth in the past six months. Also this is a positive reflection of the UK economic recovery it also presents a problem in terms of how well the Bank of England, the nation’s economic policy makers, are judged as they have been downplaying speculation over rising inflation. The inflation report will be joined on Wednesday by the Bank of England Governor’s speech which has also historically bought currency movements should he talk down UK economic health. Tuesday morning sees a clutter of UK data releases on industrial production, manufacturing production and the total trades and good balance so a disappointing or positive result could have an impact (both construction and services data last week instantly caused a movement in Sterling).
The end of the week will see nations attending the G 20 meeting on Thursday and Friday. Friday will also be an important day for the Euro with both European and German GDP figures for the third quarter due.
Dollar Weakens as Fed Rate Cut in July Seems Imminent