The Pound has risen against the Dollar and Euro in the last week, as investors have bought up UK bonds and equities, resulting in a demand for the British currency.
The ailing Pound has also been helped by a surprise increase in UK house prices, as well as weaker than expected GDP figures released for the Eurozone yesterday. Poor American employment data released last week has also helped make the US dollar significantly cheaper.
The best Euro exchange rate for a month is now available, while the US Dollar has not been as cheap for 3 months. Trading levels are around 1.11 and 1.4650 respectively.
A note of caution, however – fundamentally the UK economy is still very weak and the underlying problems are not getting any better. With RBS announcing another 9,000 job cuts, British manufacturing output falling for the 12th month running, the IMF issuing warnings on further “toxic debt” and UK interest rates sitting at record lows for the foreseeable future, the outlook is anything but good for the Pound.
Therefore if you need to make international money transfers to the USA or Eurozone, you might want to pause for thought before getting carried away with hopes of more improvements in the rate.
With the budget coming up at the end of April, there is more uncertainty ahead – while demand for UK equities and bonds remains strong you have a chance to take advantage of the relatively stronger Pound. Currency companies will be able to help you develop a strategy for any requirements you have in the coming weeks and months.
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