Welcome to the Pure FX account of the latest changes in the foreign exchange rates.
This is intended as a brief guide to movements in the exchange rates overnight, to put you in the best position for when you exchange currencies.
The euro gained half a penny against the pound overnight, as European Central Bank executive board member Joerg Asmussen used a speech in Hamburg to confirm that the euro is here to stay.
Speaking at a tax advisors’ conference, Mr. Asmussen said that the ECB will do “Everything in its power to show the euro is irreversible.” Given that the central bank has effectively unlimited firepower to defend the currency, this is no small statement, and so explains the rising euro against the pound.
Hence, if you happen to be in the Eurozone and want to buy UK pounds, this will be to your benefit, as it means you get a higher pound total when you exchange your euros.
Elsewhere, the pound could come under additional pressure today, as Bank of England governor Mervn King gives a press conference this afternoon.
Therein, the head of the BoE is expected to make a downbeat assessment of the UK economy, that could precede more quantitative easing in November. As Paul Robson at RBS notes, “we could see Mervyn King carry a more dovish element.”
The expectation of more QE would weaken the pound, because it increases the available supply of sterling. That makes the currency less valuable. However, if you intend to buy the pound, this is to your benefit, as it again makes the UK currency weaker.
The foreign exchange market continues to look forward to Thursday’s third quarter GDP estimate from the UK. Therein, the UK is expected to expand 0.7%, as it bounces back from the Jubilee bank holiday, and benefits from Olympic ticket sales. As Jane Foley at Rabobank comments, this “suggests the UK will move out of recession.” This should see the pound rise.
Find Out More
I do hope you’ve enjoyed reading this post. To find out more:
Read our Daily Market Commentary to find out what’s affecting the rates today.
Take a look at our Foreign Currency Exchange Advice articles.
Look through our Top Tips to maximise your foreign currency transfer.