Yesterday bought a relatively quiet day for the markets in stark contrast to what we have seen of late, with the high-low point of the day between Sterling and Euro being no more than 0.60% different and Sterling - Dollar experiencing no more than a 0.70% change -certainly different to what we have been used to throughout 2009 and important for those looking to exchange currency.
The losses Sterling made against many major currencies appear to be down to the potential of a hung parliament. A hung parliament is a situation whereby no particular political party has an outright majority which leads to periods of uncertainty on fiscal policies and many other factors including economic approach.
Political certainty is one of the four points of the currency compass which also includes economic stability, acts of terror and acts of god – all four of these effect the value of a currency and looking at the economic situation in the U.K over other economies alongside this matter Sterling may start to lose ground in the lead up the Christmas again this year.
Many investors will be eagerly awaiting the release of revised GDP figures tomorrow as mentioned in yesterday’s report, the revision is set to show a minor improvement and any change to this could bring major Sterling volatility.
The pattern over the past few months for the Pound has been taking two steps forward then dropping three steps back as I’m sure many of you are aware, so if you do have an upcoming currency requirement it may be prudent to take advantage of current rates before Sterling even has the chance to drop away again.
Busy day ahead for the Pound, Euro, Dollar and Swiss Franc
Today promises to be very interesting day on the markets, particularly for those of you with upcoming transfers to make that are keeping a keen eye on the current exchange rates.
Earlier this morning saw the release of GDP data for Germany at 07:00am, which came out exactly as expected so no major market movements have been seen off the back of this.
The rest of today is key so if you have any upcoming transfer involving any of the currencies mentioned then you should call your account manager here to discuss what effect the following data may have on your transfer.
At 09:00 we see Swiss unemployment data released so the CHF may well move off the back of this and then the U.K release mortgage approvals at 09:30am - A key indicator as to how the housing market in the U.K is fairing and this can have a large impact on the value of Sterling.
At 13:30pm the U.S take their turn and release their revised GDP figures in what is a huge day for the Dollar.... not only do they release GDP but on top of this we see Consumer confidence and housing price data at 15:00pm followed by the FOMC minutes from the previous interest rate decision at 19:00pm.
This could lead to large movements so if you do have an upcoming USD transaction whether it be buying or selling it is imperative you are in close contact with someone that can inform you of what is happening throughout the day.
Mervyn King and others also address a treasury committee today and traders eyes will be looking for indications on future plans as they release their latest inflation report, this could affect Sterling against all major currencies.
AUD, NZD & ZAR exchange rate movements
Many followers of these currencies will have noticed a fair bit of movement of late which I can personally place down to carry trading – carry trading is where an investor borrows money from a currency with a low interest rate (GBP, JPY) and invests it in one with a much higher interest rate (AUD, NZD, ZAR) therefore making their money on the return from the higher yielding currency
THIS IS A BRIEF SUMMARY OF TODAY'S REPORT - SHOULD YOU REQUIRE FURTHER INFORMATION PLEASE DO NOT HESITATE TO CONTACT ME EITHER BY EMAILING HERE Email Me - OR CLICKING ON THE BANNER BELOW TO SEE TODAY'S FULL REPORT I will ensure I get back to you as soon as possible to discuss the options available to you. Click here to read the full report on our main website
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Have a great day and thanks for reading!
Daniel Wright
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