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Sterling on the Rise (Matthew Vassallo)
Sterling has started gain some momentum again this week, following losses against both the EUR & USD recently. Despite GBP/EUR rates hitting a fresh 8 year high only a few weeks ago, the EUR had threatened to wipe out these gains, with a move back towards 1.35. However, as often happens the currency markets have proven unpredictable and Sterling has benefitted from better than expected UK service sector data this week, along with better than expected growth in the first three months of 2015.
However, all those clients expecting rates to shoot back above 1.40 may still be left disappointed as there is an on-going concern amongst investors that the upcoming UK general election will cause uncertainty in the markets and this could cause the Pound to weaken, a scenario the Bank of England (BoE) would likely support. Due to Sterling’s rising value against the EUR we have seen UK factory orders fall to a two year low, which ultimately means that our export industry is suffering. If this is not stemmed and we see the recent highs broken, it is likely the BoE will step in to try and control this, for fear of alienating our largest trade partners through an overvalued currency.
GBP/USD rates continue to trade below 1.50 and despite Cable rates moving back above 1.49 during today’s trading, I do feel this threshold will continue to protect the USD in the short-term. Whilst Sterling is performing well against both the EUR & AUD, the same cannot be said against the USD and it is interesting to note that both currencies mentioned have had huge economic difficulties to contend with over the past 12 months. It makes me wonder whether Sterling is actually as strong in the market as people believe, or if it is benefiting from the on-going negative circumstance that are handicapping the aforementioned currencies?
If you have an upcoming currency requirement and would like to be kept up to date with all the latest market movements, or simply wish to co0mpare our award winning exchange rates with your current provider, then please feel free to contact me directly on [email protected]
Source: http://www.poundsterlingforecast.com/2015/04/08/sterling-on-the-rise-matthew-vassallo/
