Outlook is bleak for sterling exchange rates

  • 13 years ago
  • Uncategorized

For those of you looking to transfer money abroad in the
coming weeks and months, recent strength in the Pound has improved exchange
rates, but what is likely to happen next?


Fundamentally, sterling is still weak and vulnerable to a
fall. Recent troubles in the USA and Eurozone in particular have contributed to
weaker foreign currencies and better exchange rates for sending money overseas.
However, this week we have seen what can happen when sentiment turns against
the Pound.


Barclays Capital, for example, are predicting trading
levels for sending Euro payments to fall below 1.10 in the next 6 months.


GDP, revised today, is only running at a fragile
0.2% growth in the entire UK economy

Retail sales are showing no growth at all

Unemployment figures this month were much worse
than expected

Interest rates are unlikely to go up this year,
with all 9 of the Bank of England’s rate setting committee voting to hold rates
in August


All the above factors are fundamental reasons for sterling
weakness. Assuming therefore that the sovereign debt problems of the USA and
Eurozone are managed well, which seems to be the case, we could see strength in
these economies and falling exchange rates for the Pound.


Interest rates in particular are likely to rise in Europe
and other economies such as Australia, driving demand for these currencies and
hurting the Pound in relative terms.


If you need to make international payments, a reputable currency transfer service
should always save you money compared to using your bank, but there is no way
round a low Pound so in many cases it pays to act quickly when market rates are


Exchange rates can usually be secured up to 2 years ahead
with a reputable foreign exchange
, so if you are buying property overseas or making a payment to or
from another currency, you can lock in to advantageous rates even if you don’t
have all your funds available now or don’t need to make a payment straight


Large swings in current exchange rates can literally make
a difference of thousands of pounds, and by dealing direct with a currency
exchange company, you will also be able to obtain better exchange rates for all
your transfers than those offered by typical banks.

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