Markets steady ahead of QE and Euro developments

Sterling has continued to struggle this week, with the Euro situation weighing heavily, coupled with expectations of possible expansion of the Bank of England’s Quantitative Easing programme next week, when the MPC meet for their monthly vote. Despite calls from the IMF for the Bank to cut interest rates from their current level of 0.5%, there is no real expectation of this happening, but the recent minutes made it clear QE is very much on the agenda.

This has lead to the Pound dropping across the board, highlighted most by it reaching 5 month lows against the Dollar. The Dollar has the added impetus of being the alternative safe haven for investors, with both the Pound and the Euro being shunned, so drops elsewhere are less pronounced, but if you do have an international payment coming up, then buying now could certainly avoid you losing out if this trend is to continue, which seems likely.

The one area the Pound is not losing out, is of course against the Euro itself. We are not quite at the 3.5 year highs we experienced in the last few weeks, but we are very close, and what’s more the rate seems to be holding reasonably steady. The Euro has dropped significantly elsewhere, most notably again, against the Dollar. But with the situation in Europe also affecting the Pound there seems to be a bit of an impasse. However data and unexpected news has caught us all on the hop in recent weeks, so while we are close to those highs, securing your Euros on a forward contract is probably a good idea.