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Exchange rate update and forecast (Daniel Wright)
Sterling Euro
The Pound has been fairly range bound against the Euro of late following a reasonably good gain towards the start of the year. The main talking points surrounding the Euro at present appear to be both the potential introduction of QE (Quantitative Easing) and the upcoming elections in Greece.
As regular followers will be aware QE general tends to weaken a currency (like we saw for both Sterling and the Dollar when the U.K and U.S have introduced this previously) however do also be aware that the markets do move on speculation as well as fact so the majority of this movement may have already been priced into the market.
We do appear to keep hitting a glass ceiling not too far above where the market is now and we will need to see some fairly substantial news to push us through this level of resistance so unless we see that I would not be surprised to see us remain within this range (which we are close to the top of) for the next week or two.
You should at least make me aware if you do need to exchange soon as I can then act as your eyes and ears on the markets to try and ensure you do not get caught out if the markets take a turn for the worse. You can email me on [email protected] or call me on 01494 787462 if you do need to carry out a transfer soon.
Sterling Dollar
After an almighty charge from the Dollar towards the end of December/start of January the mid-market price looked like it may well test the 1.50 marker but Sterling managed to hold off the pressure and I currently nestled just above that. The key now is whether the Dollar has a second wind and if it can actually break through a key resistance level.
In times of global uncertainty you general tend to see the Dollar come into favour as a perceived ‘safe haven’ currency and on top of this at present the U.S look almost nailed on to raise interest rates before the U.K.
An interest rate hike generally tends to strengthen a currency and a cut in rates can weaken it and at present the bank of England appear to be constantly pushing back their rate hike expectations which is not doing the Pound any good.
Sterling – Australian Dollar
Following on from Sterling hitting multi year highs the Australian Dollar has also managed to gain back ground moving back against the pound by almost 4% since the start of the year.
We have had comments from RBA Governor Stevens towards the back end of the year that his preference would be to see a weaker Australian Dollar since it is damaging the Australian economy. Personally I would not be surprised to see further comments or some sort of action to push the rate back up however this must be approached with caution as the Australian Dollar can move rapidly and substantially when it is in a particular trend.
With the rate also moving overnight, if you are looking to achieve a particular level of exchange there is the option of a limit order r stop loss contract to ensure that if your rate becomes available overnight it will be taken advantage of, or the stop loss can protect you from adverse market movements if you want no lower than a particular rate of exchange.
Thursday morning will bring unemployment figures from Australia which are currently expected to not be too great which may weaken the Australian Dollar a little.
Sterling – New Zealand Dollar
The New Zealand Dollar had also made great progress at the start of the year against the pound however a drop in dairy prices yesterday caused it to weaken away again, seeing it drop by almost 1.5%. Personally I feel the NZD may well try to head back towards 1.90 again unless we see any major news as demand for the currency is still fairly high.
Forward contracts
If you have a requirement in the future but you do not yet have the full availability of funds you can book out a forward contract. This is where you can book a rate out for up to a year in advance with just a small deposit, removing the risk of the currency market making your purchase any more expensive in the future.
This is ideal if you are in the process of buying a property overseas as you can know exactly how much the property is going to cost you today and eliminate the risk of the Pound dropping away again and missing out on this great opportunity.
I look forward to speaking with you if you have any questions or queries or you would like to book out a rate of exchange. Please feel free to email me on [email protected] and I will be more than happy to contact you personally.
Source: http://www.poundsterlingforecast.com/2015/01/13/exchange-rate-update-and-forecast-daniel-wright/
