Sterling Forecast February 2009
Market Snapshot 12/02/09
GBP – EUR -0.63%
GBP – USD -1.22%
GBP – AUD -0.57%
GBP – NZD -0.48%
This report will cover recent currency market movements for Sterling against a basket of major currencies and also outline data that is due out in the near future which may have an effect on any upcoming currency requirements you may have.
Sterling movements yesterday
Sterling yet again suffered yesterday following further selling off of the Pound after the governor of the Bank Of England Mervyn King’s quarterly report released on Wednesday. It appears that investors are now shifting funds over to perceived ‘safer’ currencies such as the Dollar and the Yen hence the losses seen over the past few days.
This is great news for anyone selling Dollars to buy Sterling or selling Euros to buy Sterling, so now may be a great time to get in touch with one of our friendly dealers here at Foreign Currency direct if this is something you are looking at doing now or even in the near future. Here at Foreign Currency Direct you are allocated a personal account manager who will assist you throughout the whole process of buying or selling your foreign currency and will make what can be a major headache a simple but effective process.
Mr King said during his report that the Bank Of England would now be prepared to take on unconventional measures such as quantitative easing (in effect printing more money) in order to bolster the slowing U.K economy.
This is big news for Sterling and a major move as it is now felt that interest rate cuts will have little or no effect on the current situation in the U.K. Below is a rather interesting graph that really does show the poor situation that the U.K has found itself in – extremely worrying looking at the past major incidents that have happened and the fact that our interest rates are already lower than that of the Wall Street crash, Black Wednesday and both of the world wars!!!!!
http://news.bbc.co.uk/1/hi/business/7832714.stm
"Both the Bank of England's GDP and CPI projections ... imply that monetary policy is still well out of kilter with meeting the inflation target further ahead," said Investec chief economist Philip Shaw.
"(They imply) that not only will the BoE reduce rates by as much as it can but that a substantial quantitative easing programme is going to have be in place to stimulate the economy, and so sterling has really failed to lift itself after a reasonably sharp decline yesterday," he said.
"Both the Bank of England's GDP and CPI projections ... imply that monetary policy is still well out of kilter with meeting the inflation target further ahead," said Investec chief economist Philip Shaw.
"(They imply) that not only will the BoE reduce rates by as much as it can but that a substantial quantitative easing programme is going to have be in place to stimulate the economy, and so sterling has really failed to lift itself after a reasonably sharp decline yesterday," he said.
FSA let the banks stray
The recent resignation of Sir James Crosby from the FSA as detailed in yesterdays report has clearly given an insight into just how poorly the U.K banking system has dealt with its recent problems, below are the eight main rules that the FSA expects firms to follow.
1. A firm must conduct its business with integrity
2. A firm must conduct its business and organise its affairs with due skill, care and diligence
3. A firm must organise and control its affairs effectively
4. A firm must conduct its business and organise its affairs with prudence
5. A firm must observe proper standards of market conduct
6. A firm must pay due regard to the interests of its customers and treat them fairly
7. A firm must keep faith with any customer who is entitled to rely upon its judgement
8. A firm must deal with its regulators in an open and cooperative way
Although these rules are meant to be strictly followed, it is clear that they have not been over the past few years and I personally think we have not seen the end of the current banking crisis. We here at FCD believe that you can only treat the problems with the banks as a huge boil that the U.K keep on throwing money at to cover up. Sooner or later this boil may well come back to haunt us and burst, which could have catastrophic effects on the value of Sterling and indeed our savings. If you have been considering moving your funds overseas like a record number of our clients have been of late do not delay - contact us on 0800 328 5884 today and we will gladly talk you through the process.
Here at Foreign Currency Direct we do not speculate with your funds. We do not do loans, purchase debt or take any risks whatsoever with your money and pride ourselves as an execution only service – we only buy the currency upon your approval therefore eliminating the risks of ending up in the same situation that many previously secure and financially sound banks have found themselves in.
If you have an upcoming currency requirement and are worried about how the recent findings could affect the cost of your transfer do not hesitate to contact one of our experienced and friendly traders and they will be more than happy to discuss the various options available to you. The options available include a forward contract whereby you can secure a rate for anything up to two years in advance for a small deposit therefore you have the peace of mind knowing that you won’t end up paying a lot more than you originally budgeted for. Please feel free to contact us and ask for further details.
Today’s data
This morning sees the release of the Gross Domestic Product (GDP) data for Germany at 07:00 and for the Eurozone at 10:00 respectively. This is a measure of the total value of all goods and services in the Eurozone as a whole and is a key indicator of the activity and health of the European economy.
Asides from this today is relatively quiet on the data front but as we have seen over the past few months that the markets can be extremely volatile and although we can lookout and predict data releases ahead, there have been a number of surprises thrown into the mix, including major companies announcing going into administration and banks here and abroad finally admitting that they are in lot more trouble than they have let on.
Don’t end up kicking yourself and paying a lot more than you expected to for your purchase as more can be lost through indecision rather than a bad decision – be one step ahead and get yourself in a position to act off the back of a phone call by opening a trading facility here at FCD and one of our experienced and friendly brokers will be in touch to discuss your requirements and help you along the way.
This is a brief summary of todays report. Click here to read the full report on our main website
If you are buying a property abroad, and want the best exchange rates, just click on the links below to go straight to our main site, or Email Me
Have a great day and thanks for reading!
Daniel Wright
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