Sterling exchange rates are relatively flat this morning in anticipation of today's Bank of England Minutes and Government spending review.
If the chance of further QE looks more likely I would expect to see sterling weakness, but the main driver in my opinion will be the Austerity measures. We may not see an instant movement for sterling as it will really demand on how much information is provided. It could be filtered out over the rest of the week. As a result Sterling may not see dramatic movements instantly, but the overall tone and reception of the Chancellors speech will have some effect on the currency markets.
If you have a currency requirement, whether you are looking to buy or sell sterling for personal or business requirements, do keep a close eye on proceedings today. I the medium term, 3-6 months I am still expecting sterling to fall against most major currencies. Against the Euros I imagine we will see levels below 1.10 before the end of the year, and vs. the US Dollar I expect to see sterling trade below 1.50 in the next 3 months. This is (in my opinion) likely because the level of cuts that we are heading for are unprecedented and the economy is in a very fragile situation at present. I think that financial markets and speculators will see sterling as a risky currency therefore the value will fall. From a government and BoE point of view I think both will be happy to see as weak pound as it will help exporters in the UK.
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