Currency Update: Monday 11th October

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Currency Update: Monday 11th October

The Bank of England left its monetary policy unchanged last week. This gave the pound a small lift but again mainly against the weaker USD. STG/USD was ticking nicely away towards 1.60, while unfortunately the STG/EUR was languishing in the 1.14s. This is mainly because of a weak USD. The USD has in recent weeks attracted some fairly negative news, the most apparent that the United States could slip into recession.  This is of course not wanted by the authorities so they will do all they can to keep the world’s major economy afloat. This uncertainty however will weaken the currency and even though the EURO is fundamentally weak it is still buoyant against the USD. This has stopped STG/EURO climbing out of this weak period. The STG/EUR rate is largely determined by the movements in STG/USD and EUR/USD. It is in fact a cross rate of these two major currency pairs. Therefore if STG/USD stays high and EUR/USD becomes weaker then the STG/EURO should move higher.

We do not think it will go that high to be honest, well not in the short term. On the upside 1.16 would be a good move and we really do need to build a base above 1.14 for the next real move to be up. Sterling is still fundamentally weak, and the Government cuts to reduce the massive deficit will bite into the currency, especially if the Central bank has to pump further funds into the system. The target on the downside still remains at 1.10. It will be a tough last quarter for Sterling and if it does manage to pull itself from the doldrums then we could see it above 1.20 again early next year. So, if we see the chance then buying Euros at 1.16 or thereabouts is not too bad. The danger in this market is that you end up “chasing” the market. This means that if it keeps going down then the decision to buy your currency becomes harder and you end up being forced to buy at a reduced level. This of course can cost more so if you require currency at a future date it may well be a good idea to price up a forward contract. Be careful, the pound is weak against the EURO, and these are not the markets to become greedy.

  • Anticipated range this week STG/EUR 1.1300 to 1.1700.
  • Bank Of England leaves Monetary Policy Unchanged.
  • Will EUR/USD reverse to downwards?
  • UK House prices expected to fall. 


Mortgages:

  • Spreads on the rise again!
  • Special offer 2 year 2.25% fixed rate available.
  • Current Interest Only calculation = loan amount x 1.64 divided by 12
     

Currency Exchange - Rates


For more information on currency exchange, please contact the Portugal Property team. This infomation was provided buy our currency exchange partners Premfx.

If you are buying a property for sale in Portugal & would like some advice on currency exchange, please call us free on 0800 014 8201 or send an email to info@portugalproperty.com

Published in: Money