Sterling has strengthened against most major currencies following the recent upbeat release of the UK’s Gross Domestic Product performance showing growth of 0.8% in the 3rd quarter of 2010 – this being far better than market expectations.
With higher economic growth performance coupled with firm inflation in the UK this has now reduced the likelihood that the Bank of England will resume additional stimulus measures (“printing money”) any time soon.
However across the pond, the resumption of stimulus measures in the US; with the Federal Reserve agreeing to make an additional $600bln available through their asset purchase scheme did initially see the US dollar weaken. We have however now seen a major focus shift from the United States, with concerns mounting that both the Irish and Portuguese governments may struggle to pay their debt without seeking help from the European Union or the IMF, sending the euro considerably lower.
Currency markets are constantly fluctuating and making your transaction at the right time can make a big difference to the amount of money you end up with. For example, if you £50,000 worth of Euros, buying on the dates specified below would have cost you:
– 25 October 2010: €55,500
– 15 November 2010: €59,000
That’s a difference of €4,500 in just less than a month!
A foreign exchange specialist can offer free information and guidance on the currency markets, helping you decide on the best time to buy. A ‘forward contract‘ is just one of the products a currency broker can offer – allowing you to buy or sell your currency in the future, at a rate you fix today. Forward contracts can help protect against adverse currency movements and can be used to lock into favourable exchange rates.
Information provided by Moneycorp, www.moneycorp.com
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