Last week saw the volatility continue in the currency markets as the GBP/USD dropped from $1.59 to $1.56 level before recovering back to the high $1.58’s (Interbank).
At the start of last week we saw the pound lose ground against the dollar as the credit rating agency Moody’s threatened to downgrade the UK from its current AAA rating. With poor unemployment figures showing the number of people claiming job seekers allowance was nearly double the predicted figure, this led to Sterling falling back to $1.56 against the Greenback.
Later on in the week we saw a rise in retail sales of 0.9% for January which was better than forecast. We also saw Bank of England Chief Mervyn King make an announcement that interest rates will be kept on hold and that a double dip recession seems unlikely. Mervyn King went on to say that a decrease in inflation has justified the latest round of Quantitative Easing and at present there are no further plans to pump more money into the UK economy. This strengthened the Pound across the board and the GBP/USD pushed back towards the 1.58 region.
With talk of a bailout package being agreed for the Greeks, investors headed back towards the Euro-zone as they left the ‘Safe Haven’ status of the USD behind. As a result the GBP/USD rate finished the week just below the $1.59 level.
Today will have a big impact on the Dollar rates as we wait to hear the result regarding the Greek bailout package. If Ministers agree to the £110bn bailout we could see the dollar weaken further. However many analysts still predict that the GBP/USD could drop to $1.50 within the next 12 months.
To protect yourself from such movements you can book a Forward Contract. This is where you can fix the current exchange rate, even if you don’t need your currency for up to 2 years. You simply fix your rate with us, and lodge a 10% deposit of the total you need to convert. You settle the remaining 90% when you want your currency to be transferred. This way you can budget effectively, safe in the knowledge you have secured rates at a high while being protected against any adverse exchange rates movements.
For further information or to book a forward contract please use the contact form on the left hand side and we will contact you as soon as possible to discuss further.
