Sterling recovered somewhat on Tuesday morning as better than expected inflation figures were released for October. The pound consequently jumped half a cent against the dollar, breaking back through the $1.59 mark. However, its recovery was only temporary with sterling’s gains evaporating as market players realised that UK policymakers would be more concerned with encouraging economic growth than controlling inflation, fuelling speculation that more quantitative easing would be announced in the near term. Sterling continued to slide, losing nearly half a percent against the U.S dollar midweek, despite official figures showing unemployment had fallen by nearly 49,000 for the months July-September. Cable fell from high of $1.5914 back to $1.5840 as Sir Mervyn King announced that the Bank of England had cut the UK growth forecast for 2013 back to 1%.
We also saw the release of another batch of poor UK data as retail sales for October came in much weaker than expected, falling 0.8% month on month. Analysts saw this release as significant as it had been expected that retail sales would begin to stabilise. This raised fresh concerns that the UK would soon lose its triple A credit rating if the country recedes into a triple-dip recession. As a result, GBP/USD continued to drop further, despite poor data across the pond, with jobless claims worse than expected. However, questions were raised as to whether this was partly due to Hurricane Sandy.
With so much uncertainty in both the US and Europe, markets are particularly volatile at present. It is not unusual to see movements of more than 2 percent over the course of a trading week. If you are buying a property overseas, or if you have foreign invoices to pay, the cost of your goods or property will fluctuate in line with movements in the foreign exchange markets.
As a specialist currency broker, I can provide you with various tools to limit your exposure to wild swings in the currency markets. Forward contracts, Stop Loss and Limit orders are all useful if you are working to tight budgets or are simply looking to maximise the return on your currency. Click here to contact me today for a free, no obligation consultation and take the first step to making the most of your currency.
