Over the past week, the pound has seen an unexpected leap in
strength against the US dollar. After several very strong weeks of positive US
data, the US Federal Reserve chief, Ben Bernake, made a serious of comments in
which he stated his belief that further improvements in the American labour
market would require faster economic growth.
This was seen by some as an
admission of weakness in the overall US economy, giving sterling a boost that
had led to a 4 ý month high against the American currency, giving us the best
rates for international payments
from sterling to dollars that weââ¬â¢ve seen all year. However, any major growth
was put off by fears that the Bank Of England might put forward more QE
measures in the future, fuelled mainly by Bank Of England policymaker David
Miles stating that the UK economy appears to have stalled, with very low growth
rates over the last six months.
The big news for the UK economy in the past week was, of
course, the budget. Despite being incredibly poorly received by the media, the
markets seem to have reacted in a small, albeit positive manner, with no major
shifts being seen as a result of it. Generally in anticipation of a new budget
we see large fluctuations in market in the days preceding and immediately
following it. Luckily we seem to have avoided it this time, with exchange rates
remaining more or less unchanged.
News remains grim for the Eurozone once again this week.
Despite not losing much ground against sterling, the common currency remains
weak, still giving us strong rates for transferring sterling to euros.
Furthering concerns about the state of the Eurozone, the Organization for
Economic Co-Operation and Development today stated that the Eurozone needs to
double its bailout fund to 1 trillion euros in order to save the weaker
economies, although this is unlikely to happen. The Spanish economy also fell
back into recession, shrinking 0.3% at the end of 2011. German Chancellor
Angela Merkel spoke with the BBC earlier this week, stressing that she doesnââ¬â¢t
believe Greece will leave the Euro, nor does she think it will be beneficial.
This solidifies the idea that, if the Euro IS to collapse, it wonââ¬â¢t be doing so
any time soon.
In the news for more exotic currencies, Japan saw its
cooperate service prices fall 0.6% over the past year. Whilst the Japanese
economy remains strong, anyone interested in sending money to Japan
should bear in mind that the yen is currently vulnerable to selling ever since
the Japanese government announced monetary easing measures last month.
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