Stable September for Sterling?
We were all excited at the start of August as the GBP/USD rate hit 1.70; however, the movement was all too brief and the rest of August provided for a gradual movement back to the low-to-mid 1.60’s.
The fluctuations in August can be attributed to the ‘risk appetite’ of investors. Improvements in the UK, Euro zone and US pushed the higher yielding currencies to gain over the Dollar, with Sterling taking full advantage of this. Despite continued improvement in the UK, investors could not ignore the minutes from the recent Monetary Policy Commission. The suggestion that a further injection of funds is needed to recover caused Sterling to sink.
September starts with Sterling at a realistic 1.61. So what does this mean for the rest of the month? Sterling may continue to struggle against the Dollar. If we see the rate drop below 1.60, it could continue on the downward trend. Mid-to-high 1.60’s are not totally unreasonable goals, but if it does hit it may not stay for long.
The Euro zone celebrated as France and Germany officially came out of recession; however, the Euro did not respond as well as expected. The news of stability in August is expected to continue through September.
The Canadian Dollar benefited from the same risk appetite at the start of August as Sterling and was equally similar in its inability to hold that position. Not much movement is expected in the CAD rate as the Bank of Canada takes measures to ensure the currency doesn’t reach parity.
If you have a client…
On the whole, the return to some level of stability is good for the market; however, this makes the 1 cent or 2 cent movements even more important to people looking to exchange funds. If you have a client who has a foreign exchange requirement, contact Moneycorp today. We can help!
It pays to use the experts.
Contact your Michael Saunders & Company agent for more information on Moneycorp.