UK on Hold… Again

Imagine the behaviour of a wallaby in the back garden of a woman’s house in Lyme Regis and we could just about string together odd comparisons to this and the current nature of the UK foreign exchange markets. Sterling seems to be facing an uncertain future and we have once again seen our local currency slide against its two major counterparts, the euro and US Dollar. Market information and sentiment surveys are coming through with such unpredictable outcomes that even loose forecasts are proving a challenge. In order to protect yourself from the current volatility speak to your broker about a market order or a forward contract today. Pound Sterling Sterling remained unshaken after the release of the latest BoE minutes. The committee remains in limbo over a potential rate rise with six out of the nine members, including Governor Mervyn King maintaining an overly dovish policy by voting to keep rates firmly at 0.5 percent. Chancellor of the Exchequer George Osborne has backed the decision stating that the Governor is right to look beyond the short term. However, with the UK unemployment rate coming in better than expected at 7.7 percent, Sterling has reacted in a bullish nature, gaining roughly 0.2 percent against our nearest counterpart the euro in the immediate aftermath. Dollar With pressure mounting on the Federal Reserve the Dollar fell for the third consecutive day against the Euro. It is expected that America will trail the European Central Bank in raising interest rates. The fed continues to print money belligerently and with minutes being released from its April 26-27 meeting where Chairman Ben Bernanke stated the economy still required monetary support we are yet to see any inflation concerns raised. Euro The ECB are considering a further rate rise to stem the issues of inflation in the eurozone. Whilst Greece’s debt repayment schedule remains the focus of attention the single currency seems to be standing its ground making lengthy movements against Sterling. Once again, as a short recommendation to Euro sellers, now is a time to really consider moving funds. Many investors are stating that selling Euro-US Dollar and Sterling at current benchmarks is a positive position. If you would like further information on this it is worth speaking to your currency broker. Other Currencies – Highlights After recent days, the Canadian Dollar finally regained some momentum gaining strength against the US Dollar as crude oil, Canada’s largest export, erased its decline. For those of you interested in the Asian currency markets, three year rate swaps in Japan slumped to six month lows on the back of the nuclear and quake disasters. This has depressed the economy into recession after figures came in worse than expected. Furthermore, reports due to be released tomorrow are expected to show that gross domestic product shrank in the first quarter at an accelerated rate