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Why the pound can only strengthen from here
When trying to determine the exchange rate forecast there are various indicators to consider which can help us to work out the ultimately impossible to answer question ‘what will happen next on exchange rates’. My favourite indicator to look at is the words and comments of the central bankers and their teams to see what kind of language they are adopting. The Bank of England today confirmed that they felt the time for an interest rate rise is moving forward and as such sterling is highly likely to strengthen in the future.
One of the main reasons the Bank of England kept interest rates on hold this month is the fears over Greece. That is not to say that removing Greece from the equation would have led to an interest rate rise but that it was a factor preventing most members from looking at the economic situation of the UK. With Greece seemingly dealt with now market attention has and will continue to look more at the economic data and see to what extent it corresponds to the Bank’s own language on raising interest rates.
Why do interest rates strengthen a currency?
Raising Interest rates by a central bank strengthens the currency concerned and the mere prospect of that event happening in the future will serve to increase the value of the currency concerned. When considering a large currency purchase and trying to understand which direction your exchange rate will take, working out what drives the exchange rate will be of key importance to understand what might happen.
Therefore if UK economic data keeps showing the UK economy is growing, creating jobs and people are spending money the Bank of England will be more likely to raise the base rate which should strengthen the pound.
The pound has strengthened and is currently enjoying multi-year highs against the Euro, Australian dollar, Rand, Canadian dollar, Kiwi dollar and the Swedish Kroner. If you need to buy the pound then you might wish to make some plans sooner rather than later. If you are business getting paid in Euros or an overseas property investor looking to repatriate funds and buy in the UK our services might really be up your street.
If you are considering a large volume currency purchase why not get in touch to see if we can offer some assistance with your exchange? Alongside friendly and knowledgeable customer service you can check your current exchange rate to see if you really are getting the best deal.
My name is Jonathan and I have been working as a currency specialist for over 5 years. I like to think I am approachable and can answer any questions you might have not just on the markets but also our services!
Please feel free to drop me an email on [email protected] and I really do look forward to hearing from you 
Source: http://www.poundsterlingforecast.com/2015/07/22/why-the-pound-can-only-strengthen-from-here/
