Why It Was A Hectic Foreign Currency Week

  • 12 years ago
  • Uncategorized

Sterling has seen a strong week against the Euro, reaching a
19 month high against the single currency. Whilst sterling has encountered some
resistance at this level, some analysts now believe that sterling could break
through, having held at more or less the same level since December.

Further
concerns regarding the ongoing Eurozone debt crisis could weaken the Euro
significantly enough to give the pound the boost it needs. However, some
analysts claim that sterling gaining too much strength too quickly could damage
exports, a key part of the Government’s economic strategy. Therefore, it
is possible that the UK central banks will impose methods to slow down
sterling’s growth temporarily. We should get a definitive answer to this
in the Bank Of England minutes this coming Wednesday. The minutes will also be
released with UK job statistics, which, considering recent trends, could prove
negative for sterling. Nonetheless, it seems unlikely that  the sterling
will weaken significantly within the next few weeks, ensuring that rates for
transferring sterling to euros remain the strongest we’ve seen for a very
long time.

The European debt crisis continues to weaken the eurozone,
with announcements this week that the French economy saw no growth in the first
quarter of 2012, and shows no indication of short-term recovery. This came as a
shock for many analysts, as France has often been perceived as one of the
stronger economies in the Eurozone. Data released earlier today shows that this
no doubt contributed to sterling’s rally against the euro this week.
Further concerns regarding Spain’s borrowing costs contributed to
Eurozone woes, especially with the release of data showing that Spanish banks
were primarily relying on ECB lending. The Euro isn’t the only currency
to see a dip in strength this week, as the Australian Dollar saw a decrease in
value, due to competition from the Chinese Yen. This is good news for anyone
looking to transfer
sterling to Australian dollars
, as it has also caused the British
currency to gain strength against the Aussie dollar.

The Euro did see a brief rally against the US Dollar earlier
this week, due to mixed American economic data. Increases in fuel prices caused
US consumer prices to raise 0.3% from Feburary, which caused the Dollar to
briefly dip in value against the Euro. However, European data ultimately proved
to be weaker than US data, and the American currency managed to regain the
ground it had lost. Unemployment in the United States still stands at 8.2%, a
relatively high rate, but government plans to cut unemployment will probably
lead to short term growth in Dollar value, even if the plans turn out to be
unsuccessful.

Anyone looking to get the latest currency news, or send international
payments
at the best rates available should speak to a reputable currency broker in the first
instance.

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