Sterling falls to its lowest levels for more than four weeks on the bank of BoE report

Sterling fell to its lowest levels for more than a month on Wednesday, as the Bank of England inflation report fuelled speculation that more quantitative easing could be on the horizon. Rates fell sharply on the back of the data release reaching a low of $1.5889 before recovering back to levels above $1.59.

Bank of England Governor Mervyn King indicated that the UK could be vulnerable from the growing issues surrounding the Euro-zone which prompted investors to sell the pound and once again choose the safe haven U.S dollar.

With Greece coming under increasing pressure, talk of a default has surfaced again and policymakers are concerned that Greece leaving the Euro will have a knock on effect for the British banks. This in turn could affect the UK recovery and result in the BoE adding to their asset purchasing scheme by pumping more money into the UK economy.

Know one is 100% sure what will happen with exchange rates should Greece default and leave the Euro. There are arguments for both sides, could trimming off the dead wood make the Euro stronger or will it have a knock of effect and lead to Spain, Italy, Portugal and Ireland looking to follow suit.

There was some positive news for the UK today though as unemployment figures released showed that the number of people out of work and claiming for unemployment fell at it quickest pace for nearly 12 months.    

What is clear is just how volatile the currency markets are at the moment, if you are looking to buy or sell dollars in the coming weeks holding off could end up costing you thousands. To protect yourself from adverse market movements and to make the most out of your currency transaction click here to send me a direct email or complete the contact form on the homepage of the blog.