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Currency Advice Now Essential For Investors

The Eurozone crisis has made it now essential for overseas investors to take advice before purchasing abroad.

The Uk economy has seen a surprisingly strong week, which has marginally improved the value of sterling. The major news this week was the Bank Of England’s Quantitivie Easing announcements on Thursday. Despite expectations in the week leading up to the announcement that the BoE would inject a further £75 billion into the economy, they announced on Wednesday that this had been reduced to £50 billion. This suggests that the Bank Of England is increasingly confident in the Uk economy, further removing fears of a second recession. All other Bank Of England announcements were as anticipated, including holding the interest rates at the historical low of 0.5%. However, since they have been held at this level since 2009, this decision came as no surprise. This positive news for the Uk economy has made the conversion rates for transferring pounds into other currencies very strong.

The Eurozone has not enjoyed the same level of good news this week. Once again the focus is on Greece, and their apparent inability to act on their economy. Amid widespread protests in Athens, Greek MPs are strongly expected to vote in favour of new austerity measures on Sunday, expected to cut the Greek budget by 325 million Euros. This would allow the European Central Bank to give Greece a further 130 billion euros in Bailout funds. However, like previous Greek bailouts, this will likely be a short-term solution to the problem, as Greece simply doesn’t have enough money to pay back its own debts, and with unemployment rising about 20% this week, it seems unlikely their economy will recover in time. With Greece dragging the entire Eurozone down, it is likely we shall continue to see similar rates for transferring sterling to Euros that we have seen for the last month, which are the highest since September 2010. The European Central Bank itself has decided to leave Euro interest rates unchanged at 1%.

Germany, the economic powerhouse of the Eurozone, has announced this week that exports for 2011 rose 11.4%, earning the company a further trillion euros, ensuring their economy remains strong. Angela Merkel is continuing to support the Eurozone, stating that if the Euro fails, Europe fails. This solidifies the fact that it is incredibly unlikely that the Eurozone will collapse in its entirety, even if weaker economies such as Greece are forced to drop out. In fact, many analysts are now of the opinion that if Greece defaulted on its debts and dropped out of the Euro, the value of the currency would increase. Therefore, anyone looking to transfer money into Euros for the purposes of buying overseas should not worry about the entire currency collapsing.

Sterling has also seen strength against the US Dollar this week, reaching a 12 week high for transferring pounds into dollars. This strength is unlikely to last for long, however, due to the announcement that unemployment rates in the US have dropped to 8.3%, the lowest in three years, which is likely to provide further confidence in the US economy, which will likely cause the value of both the euro and sterling against the dollar to drop.

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