Euro Pound Exchange Rate Report – 17th May 2010
May 17, 2010 Leave a comment
Last week we witnessed a volatile week for the GBP/EUR pairing with a massive 4.1% difference between the high point and low point of the week, in monetary terms this would mean a huge difference of £8,200 on a £200,000 trade. The high point of 1.18370 was one of the highest seen since June of last year and represented some excellent buying opportunities.
Confusion and unrest seem to have gripped the Eurozone following Nicolas Sarkozy’s statement at a Brussels summit of EU leaders on Friday that unless drastic measures were taken France would pull out of the Euro. Share prices dropped across Europe and the Euro has slid to an 18-month low against the Dollar on fears that the Eurozone bailout of Greece will fail. Reports have surfaced that French president Nicolas Sarkozy threatened to pull his country out of the single currency altogether to force Germany to agree to the rescue plan. Sarkozy reportedly demanded “a compromise from everyone to support Greece … or France would reconsider its position in the Euro,”. This obliged Angela Merkel to bend and reach an agreement. As if this didn’t put the Euro under enough strain, the panic selling was stoked by news that Spain’s underlying inflation rate turned negative in April for the first time on record, adding to fears that the country is facing a cash crunch.
All of these factors have put the Euro under a considerable amount of pressure and it is fair to say that it has never looked quite so fragile, potentially we could see the Euro continue to depreciate further. If you are looking to buy or sell Euros it would be prudent to contact your Currency Broker and ensure your trade is executed at the most profitable time in accordance with your requirements.
Monday saw the release of The Bank of England Interest Rate decision, this was largely ineffective as it remained at 0.5%, meaning it had little to no effect on investor confidence And therefore the currency markets.
Wednesday saw the release of the UK Jobless Claims Change, Jobless Claims fell less than expected in April as the Claimant Count dipped to 4.7%; Unemployment remained at 8%. Once again this had little effect on the markets. The same however, cannot be said of Bank of England Governor Mervyn King’s statements during the central bank’s quarterly Inflation Report. King has persisted with his view that a weak Pound is good for the UK economy, and his huge influence inevitably caused the Pound to depreciate in strength slightly as investor confidence was shaken. Similarly, New Business Secretary Vince Cable’s planned reform of the UK banking sector has dented investor confidence also, and as a result, put Sterling under pressure on Wednesday, encouraging the decline against the Euro down to 1.165.
The pessimistic view of investors is likely to continue in the short term as the new UK government begin to put in place the necessary changes to claw back some ground against the nation’s economic deficit. This means now would be an ideal time to lock in a rate with a Currency Broker by way of a forward contract, of which your account manager will be able to navigate you through the process of placing a forward option to protect against further Sterling depreciation.
If you have yet to open a trading facility to gain access to commercial rates of exchange click here to open a currency exchange account today.