|
|
GBP volatility in Sterling Euro exchange rates
|
|
|
|
|
Thursday, 05 March 2009 |
|
This week we have lots of economic data releases for both the UK and the EU, and so we are likely to see some volatility in Sterling Euro exchange rates.
We have already seen UK Mortgage approvals for January showing less mortgages were agreed than forecast, confirming the continuation of the downturn in the UK property market. This data has already started to weaken the Pound in Monday morning trading.
This Thursday we see both the Bank of England (BoE) and the European Central Bank (ECB) announce their Interest Rate decisions at 12:00 and 12:45 respectively. As you can see from the chart above, Interest Rates in the UK are at a record low of 1%. Most analysts expect both the BoE and ECB to cut rates by 50 basis points. This will leave EU rates at 1.5% and UK rates at new a low of 0.5%. With such low rates, investors will receive next to no return on Sterling; the currency could therefore become weaker. The reason for this is that as investors move funds to currencies with a higher yield such as the Euro. The Euro then becomes stronger and Sterling becomes weaker, and the net result is lower exchange rates.
Current levels for purchasing Euros are more than 10% better than at the start of this year. With expected interest rate cuts, and further negative economic data releases also expected, consider locking in today’s rates using a Forward Contract - for a small deposit you can guarantee today’s rates and protect yourself from a possible weakening of the Pound.
Look out also for UK Nationwide Consumer Confidence data on Wednesday, and UK Producer Price Index Data on Friday. Both of these releases could cause volatility for the Pound.
»
No Comments
There are no comments up to now.
» Post Comment
Only registered users can write a comment.
Please login or register.
|
|
|
|
|
Who's Online
We have 33 guests online
|
