A Tough Year Ahead

With just a year to go until the Olympics, it’s not just our athletes that are under immense strain. Our government has come under increasing pressure in the wake of growth figures that suggest there is little of that actually occurring. The Japanese tsunami caused disruptions to the global supply-chain and the royal wedding added another bank holiday into the equation. Boris Johnson (of all people) has reverberated my views on the upper tax bracket, stating that it should be reduced to encourage spending and show that we are ready and able to get moving. Hopefully with a little more forward momentum…

Pound Sterling – UK Markets

On the back of poor growth figures the UK housing market also took a hit with demand falling on the back of tighter lending. This has consequently dented consumer confidence and the difficulties in getting a mortgage kept potential homebuyers off the market. With the markets suffering and our government keeping interest rates low and our currency weak it appears a new benchmark for trades must be ascertained. The days of which we were able to purchase currencies at a low cost have disappeared and clients who have benchmarked at those levels should speak to their broker about new recommendations.

US Dollar – US Markets

Another night has passed and still no conclusive decision. According to a group of 53 economists polled by Reuters, 30 believe that the US will lose its triple-A credit rating from at least 1 top ratings agency. Furthermore, the new International Monetary Fund Christine Lagarde yesterday launched a scathing attack on US leaders. In essence, she labelled leaders childish and infighting needed to come to an end. They have been ordered to follow the strong leadership shown by European leaders last week and come to an orderly decision.

Euro – European Markets

At present, I can state that the euro is a steady ship avoiding the stormy waters that the US is currently facing. However, do not be fooled into thinking it will be plain sailing. The IMF has been playing a very careful game, taking the majority of the spotlight off the Eurozone even though Greece is failing to satisfy the majority of investors and economists. The euro remains relatively strong against sterling and the US Dollar and at times like this we are still recommending euro sellers to act sooner rather than risk waiting.

Other Currencies – Highlights

The currencies down under continued their surge as the Australian Dollar hopped onwards and upwards. A government report showed consumer prices rose more in the second quarter than economists had forecast, prompting traders to slash bets on an interest-rate cut. Another commodity currency, the South African Rand rose to its strongest level versus the US Dollar as gold prices continued to soar on the back of the US debt crisis. The rand climbed as much as 0.4 percent against the dollar.