FX markets volatile as US debt crisis worsens
29 July, 2011
The political crisis surrounding the US debt problems is causing volatility in exchange rates and providing buyers of overseas property with short-lived spikes in which to buy their currency.
This week we have had the vote on measures to limit government spending, proposed by Republican Senators, delayed by their own rebels, as well as President Obama threatening to veto the plans as the Democrats seek instead to increase the agreed limits within which US debt must operate. By Tuesday, the current limit is said to be likely to expire, meaning a solution must be found to avoid a US default and possible downgrading of the country’s debt.
All this has led to weakness in the US Dollar, which today has become cheaper by 1.5c against the Pound. The knock on effect to the Euro, which has well documented problems of its own, has been further volatility with 1.5c between the high and low rates this week for sending payments in Euros.
In addition, US growth figures out this afternoon showed a disappointing 1.3% annual rate in the 3 months to June, leading economists to warn of another possible US recession.
Next week is likely to be a rollercoaster ride for the US Dollar, Euro and Pound. Monday and Tuesday could well see further weakness in the US Dollar, which in turn could lead to strength in the Euro and perhaps worse rates for buying Euros for UK buyers.
Whatever your requirements for buying or selling foreign currency, be it for an overseas property purchase or a payment on behalf of your business, make sure you have a professional currency exchange company on hand to keep you updated with the latest developments. Monday also sees the release of Eurozone unemployment data at 10am UK time.
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