Euro – ahead of the game
The Euro is close to its best ever level against the US Dollar. For the last few months it scored one record high after another as the once mighty Dollar steadily lost ground. For Sterling the story has been slightly different. It has managed to establish itself above $2. It has even managed to reach its highest level against the Dollar for a quarter of a century. But it has not managed to keep pace with the Euro.
Sterling – ups and downs
Sterling had been doing fine until the news about Northern Rock hit the street. It resulted in a five cent setback that has not been recovered. Effectively the Pound has swapped a three cent range between €1.46 and €1.49 for a different three cent range, this time between €1.42 and €1.45. On the bright side Sterling looks increasingly confident in its new home. There have been (so far) no new cataclysms among British financial institutions. Parliament's Select Treasury Committee has interviewed those involved and, whilst it has pointed the finger of blame at all of them, none has been ordered to fall on his sword. |
| All information is treated in strict
confidence (although it will be passed a specialist currency exchange
professional in order to provide you with details
of the best products and rates available). By submitting the form to us you are deemed to have
authorised any such disclosure. |
|
UK interest rate movement
The Pound has also found relief in the evolving attitude to UK interest rates. While the Northern Rock imbroglio was making waves, analysts thronged the business news channels to predict financial melt down and swinging rate cuts. As the waves subsided they wondered whether their prophesies of doom and gloom had perhaps been exaggerated (as if). Lately, and writing shortly ahead of the November meeting of the Monetary Policy Committee, Bank watchers believe that there is at most a 2/1 chance of a base rate cut this year. The heat is off for the moment.
|
Interest rate rise for Euro zone?
That still leaves the Euro with an ace up its sleeve. While inflation in Britain has settled below its 2% target, prices are rising more quickly on the continent. Euro zone inflation is above target and the European Central Bank (ECB) continues to talk tough. Whether the ECB actually has the bottle to raise interest rates, when all around are easing theirs, remains to be seen. Even so, the very possibility of a rate increase keeps alive investors' appetite for the Euro.
|
|
New year, same interest rate?
It will be very interesting to see how this all pans out as the year draws to a conclusion. The aftermath of the summer panic will certainly throw up more financial carcasses on the beach. The economies of neither Britain nor the Euro zone will be immune from its effects. Yet we are still waiting for the bad news. There has been little of it yet. UK house prices are staggering along, one day down (Hometrack), next day up (Nationwide). European consumers seem to be relatively happy, as do those in Britain. It would not be a great surprise to see both Euro and Sterling interest rates unchanged at the beginning of 2008.
|
A steady Pound
Nor would it be a surprise to see Sterling/Euro tottering around current levels in two months' time. Sterling does after all have a useful 1.75% point yield advantage over the Euro. As long as investors are not in one of their flappy panics they tend to notice things like that. The Pound might have dropped from one steady trading range to another but one must admit that it does look steady.
|
French property buyers take stock
But just in case Southern Rock makes the headlines next week, why not lock into an exchange rate now if you intend to spend money on French property in the foreseeable future? Through a currency specialist (Advantages of using a currency broker or foreign exchange specialist) you can agree an amount, a price and a date for your purchase of Euros. The settlement date can be set months into the future. All you have to find on day one is a percentage deposit. A forward transaction, as it's known (Currency exchange options which save you money), fixes the exact number of Pounds that you will have to pay for a similarly specific number of Euros. Even if Sterling does go for another walk it means you will have nothing to worry about.
Additional articles which may be of interest:
Currency Exchange - Buying Euros at the Best Rates - Your FAQs
Glossary of terms used in currency exchange
Feedback on currency brokers or foreign exchange dealers
|
|
About the author
The information in this article has been supplied by the currency broker Moneycorp. For further advice on currency exchange and money markets, call Moneycorp today on +44 (0)20 7589 3000. Alternatively go to www.moneycorp.com where you can open a free, no obligation Trading Facility. Make your money go further!
You can contact Moneycorp directly using the links below.
Want to save time and money? Open an account now with this link:
Or get one of the Moneycorp team to phone you (saving you the price of the call). Just click on the phone icon, type in your telephone number and someone will call you straight back...
|
|
|
