Currency Market — Exchange Rate Update

As the Eurozone debt crisis continues to dominate the news headlines, the currency markets have remained volatile. Whether you are sending money to Cape Verde to buy a property, or transferring US Dollars back to the UK from a business transaction, it is worthwhile keeping updated with the latest news.

In the UK, we have had a mixed bag of data in the last week. This morning’s public sector borrowing figures were better than expected, with net borrowing down to £6.5bn in October, from £7.7bn a year earlier. Also positive for the UK economy – and the Pound – were last week’s retail sales figures. However, unemployment was worse than expected, and with inflation falling back a little the Bank of England may be tempted to extend quantitative easing (QE) in December, which would be likely to bring sterling falling back again.

We have the minutes from the last Bank of England meeting due out tomorrow morning.

In Europe, the new Greek, Spanish and Italian governments have not calmed bond markets as much as was hoped, and the Euro has stayed relatively weak, giving the best Euro rates since around March if you are sending payment across to the single currency zone. The Euro is tipped to strengthen (lower exchange rates) when Greece finally ratifies the bailout deal, although with Spanish debt now more expensive than Italian bonds, the crisis may not have yet reached its peak.

The European Central Bank also cut interest rates earlier this month, which helps to keep the currency cheap.

The weak Euro has made US Dollars relatively more expensive, despite reported problems in the US government where their own debt reduction programme has been encountering its own problems.

The main currencies where exchange rates have continues to improve have been the Australian and New Zealand dollar, and South African Rand. Sending payments to New Zealand is now at its cheapest since April, as investors have tended to move away from the less-traded currencies in times of trouble; another reason why the US Dollar has been gaining in value. For South Africa, we have the best exchange rate for sending South African Rand since mid-2009.

If you have payments to make to or from the UK in other currencies, visit the HomesGoFast FX enquiry page and we will put you in touch with an FSA regulated currency partner who will be able to help you save time and money compared to using your bank.

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