Charles's Thoughts: UK economic news was limited this week and came in line with expectations. This meant that sterling tended to move based on news/sentiment from elsewhere. Against the euro and the US$ sterling continues to move in a narrow range between its highs and lows and it is a case of taking advantage when you see an appropriate level. We are now in the heart of the Christmas retail period and it will be interesting to see how resilient the UK shopper is.
The US$ has done the same as last week. Even though the starting rate looks very similar to the closing rate, the exchange rate during the course of the week was far from constant. At the beginning of the week risk appetite grew and the US$ weakened by over a cent and half against sterling. We then had the US non farm payrolls [effectively their unemployment figures] on Friday which came in better than expected which seems to have confused the market as some believe it is a turning point and others believe they are nonsense. But the net result has been a rapid strengthening of the US$ against sterling and the euro. We wait to see if this continues into next week.
The European Central Bank met on Thursday and did as expected. They kept interest rates on hold and they announced the withdrawal of the dates for their short term funding facilities with this months 12 month offer being the last of this type and the 6 month offer in March 2010 being the last of this type. So the ECB has been much more effective than the Bank of England in detailing clearly how they will remove their equivalent of the BoE's quantitative easing programme. The euro initially benefited from this clarity gaining ground against sterling and pushing through US$1.50/€1 against the euro. However Friday’s US non farm payrolls [effectively their unemployment figures] quickly reversed these gains.
On Wednesday we saw the Australian Central Bank raise Australian interest rates by 0.25%. This is the third month in a row they have done this and is a good indicator of how robust their economy is and how successful the central bank have been in maintaining liquidity and stabilising the economy despite the worldwide slump. Also it lent support to other commodity backed currencies.
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.
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