Charles's Thoughts: Sterling had a better week gaining against most currencies. There wasn’t a whole lot of economic data out this week. Although the purchasing manager’s index for manufacturing for August fell from the prior month the same survey for the services sector was positive and expanding at a faster rate than forecast. These surveys together with improved business expectations and labour shedding beginning to slow has led to hopes being raised that the UK economy could return to growth in the third quarter. But what of next week with the Bank of England holding their next meeting. The outcome from the last BoE meeting sent sterling into fast reverse so hopefully we won’t see the same thing this coming week. The US$ had a steady week losing ground on the back of increased risk appetite. Unemployment figures for August were in line with expectations and the rate of job losses has reduced significantly from earlier in the year. However, US unemployment is now over 14 million and at 26 year highs. This is why the Federal Reserve have made it quite clear that interest rates will be kept low for the foreseeable future as the US economy is likely to recover slowly and there is still a possibility of deflation given the high level of unemployment and spare production capacity.
The European Central Bank met this week and kept euro interest rates on hold which was expected. The accompanying announcement by the ECB president highlighted that the eurozone faced a very gradual recovery and that it was too soon to even consider raising interest rates. This latter statement undermined the euro. Otherwise as previously reported the eurozone as a whole is emerging from recession with Germany seeming to lead the way.
The high-yield and/or commodity backed currencies had a quiet week but still remain as the strongest currencies on the market at present being propped up by the Chinese demand for commodities and the greater return sought by investors who are leaving the safe-haven positions with little to no interest on offer.
Why is Currency Management So Important? Using a bank could cost you £3-4,000 per £100,000 transferred. Buying at the “wrong” time could cost you many £’000’s more as rates can move as much as 3% in a very short period of time. Then add in transfer costs that the banks charge for sending and receiving funds and you could be looking at additional costs of £10,000 per £100,000 transferred. By developing a currency strategy and by working with a specialist currency broker these losses could be minimised if not eliminated.
Smart Client Testimonial: "Thank you for making our transactions go so smoothly. As promised, our account was opened within hours. Your traders were pleasant and efficient, and each transaction was very much at the exchange rate I expected...ie not a million miles away from the inter-bank rates and certainly much better than my high street bank could quote. All in all, an easy experience and we will have absolutely no hesitation in recommending your services to any of our friends buying property abroad.” Ian Pritchard If you haven't opened a Smart account yet, call me on freephone 0808 163 0102 (+44 0207 898 0541) or fill out our online Account Form at: http://www.SmartCurrencyExchange.com/application.htm
How much will a Property Cost? To estimate the cost of a property simply DIVIDE the price of the property by the appropriate rate noted above. But note this is based on the inter bank rate so the actual cost will be slightly more.
