Pound rallies after economic future looks more stable

Sterling made substantial gains last week, hitting its highest in 7 weeks against the Euro, and follows on from a 10 month high on the Dollar the week before.

The gains began following the Bank of England’s Quarterly Inflation report and the subsequent speech by its Governor, Mervyn King which suggested that whilst economic growth in the UK was not particularly strong, there was very little risk of a double dip recession.

The news suggests the Bank of England are unlikely to need to extend their Quantitative Easing program in the near future, the threat of which was a major factor in dragging down the value of sterling in recent months. However this does not necessarily mean the pound will keep rising as there were other factors helping sterling exchange rates last week- such as problems in the US and Eurozone- which will be examined later in this report.

Also there is still a risk that if companies and consumers tighten belts over the Christmas period due to fears over the future of the economy and job security then economic growth may slip back and the prospect of QE may increase once again- bad news for the pound! Over the last two years sterling has all but collapsed in late December for a number of reasons, so if you are worried about an upcoming purchase and would like to lock in exchange rates on a forward contract to avoid an unexpected change then speak to one of our experienced currency brokers to find out how on 0800 328 5884


Short Term Future For Sterling


Whether or not sterling can continue its recent run of form will largely depend on a raft of data out next week, including more inflation figures, the minutes from the latest Bank of England meeting, unemployment rates, and retail sales figures. If all the information is relatively good for the UK then it would not be a surprise to see sterling to flirt with levels just below 1.20 on the Euro and into the mid 1.60s on the Dollar.


If you are buying a property abroad and want the best exchange rates, just email ajm@currencies.co.uk / call 0800 328 5884 or visit www.currencies.co.uk and quote AJM Blog GBP Sterling USD Dollar EUR Euro NZD Kiwi AUD Aussie DKK Krona CAD Loonie CHF Swiss ZAR Rand THB Baht HKD Dollar CZK Krona TRY Lira SEK Krona NOK Krona