Exchange Rates dropping fast
The problem lies with the Bank of England's quantitative easing programme. There is more money being pumped into the economy than analysts expected, and that is causing concern for the UK economy.
Next week will see the central Bank's next announcement on the subject, so until we have some clarity, Currency Index expects the Pound to continue to struggle.
Current interbank [mid-market] rates:
£1 = €1.1450, US$1.6365, AU$1.9525, NZ$2.3840
As the extra funds have tended to devalue the Pound, the shock news send sterling tumbling over half a cent against the Euro and Dollar this morning, with the Dollar rate recovering slightly this afternoon.
Tomorrow's UK retail sales will now be interesting - can we get some good news from the high street, or will further gloom add to the weight on sterling exchange rates?
Year-on-year, prices rose 1.8%, again above expectations of 1.5%.
The Pound has spiked up a little on the news, although Germany's upbeat ZEW economic sentiment data has halted any huge gains against the Euro.
Thursday's retail sales figures are the next key UK data, so anyone worried about the Pound falling further in the coming weeks, may see this as a 2-day window to look at securing commercial exchange rates.
The Pound's recent drop may well continue therefore and Currency Index would urge anyone looking for the best Euro exchange rates or cheapest US Dollar transfers, to consider locking in rates on a forward contract to eliminate the risk of paying even more in the future.
This week's currency news 319
Comments by the Bank of England’s governor King last week citing a “fragile” recovery at best in 2010 did not help the Pound – as France, Germany and Japan have all now technically come out of recession and the UK is therefore lagging behind its main competitors.
As a result, the Pound has continued to fall against many major currencies, making sending money overseas more expensive. Euro rates are nearly 4c down in the last 10 days, while the US Dollar rate is nearly 7c down in the same period.
There is not a huge amount of significant data this week, although the UK's inflation and retail sales numbers will be interesting. Whatever your currency requirements, contact a currency company to discuss them and make sure you are equipped with the latest news.
Rightmove House Price Index (already released)
0230 – Australian interest rate meeting minutes
0930 – UK CPI & RPI inflation figures
1330 – US PPI inflation and house building data
1200 – Canadian CPI inflation
0930 – UK retail sales
1330 – US jobless claims
1500 – US home sales
Australian dollar rate at 11 month low
This would be the first upward interest rate move by a developed economy, since the financial crisis started last September.
If you need to send money to Australia in the coming months, contact your currency company to discuss your transaction - if interest rates do start to go up in Australia, exchange rates could easily fall further still.
This morning's unemployment figures showed an increase to 2.44m - the highest level since 1995.
Unsurprisingly, the Pound has not reacted well this morning, losing nearly a cent against both the Euro and US Dollar.
Contact Currency Index if you would like to discuss the implications for your currency transactions.
This could have profound effects on sterling's value in the currency markets, particularly after last week's decision by the Bank to extend quantitative easing by £50bn.
The likelihood is that inflation figures will be low - which usually causes the Pound to fall.
Contact Currency Index tomorrow morning if you need to send money abroad and are worried about exchange rates falling - you can call us on 0800 043 2623 from around 8.30am.