Welcome to our account of changes in the foreign exchange rates in the last 24 hours, as well as our look ahead.
In The Past 24 Hours:
1. The pound fell across the board yesterday, as the Bank of England cuts its UK growth forecast for 2012 while warning that inflation will remain above its 2.0% target until mid-2013.
2. In spite of this, the euro remains under tremendous pressure on widespread speculation that the end of the currency (in its current form at least) is inevitable.
These comments come as Greeks withdraw hundreds of millions from their bank accounts, one economist puts the cost of Greece exiting at $1tn, and borrowing costs in Spain reach unsustainable levels. All this could see the euro foreign exchange rate fall again in the immediate short term.
3. Bank of England pessimism and Eurozone panic aside, UK unemployment fell for the second month on the trot yesterday, declining to just 8.2%.
This has led to some comment that last quarter’s growth figures (putting the UK in recession) cannot be right, and that in fact the UK is staging a sustainable recovery. We’ll have to wait until next month for the revision of Q1 growth data, but if it improves that could boost the pound foreign exchange rate no end.
In Focus: Greece to Exit The Euro?
Speculation that Greece will soon exit the euro reached its greatest pitch yet yesterday, as it emerged that Greeks are removing hundreds of millions from their bank accounts (the idea being to protect their savings in euros if the drachma returns) while Bank of England governor Mervyn King made the (if nothing else) blunt comment that the Eurozone is tearing itself apart.
For the moment, the markets are focused on the UK’s domestic woes, explaining the half-cent decline in the pound against the euro overnight, but if it becomes apparent that Greece must soon exit the euro, this weakness is sure to pass. In my opinion, the euro foreign exchange rate looks set to continue its decline.
I will of course return with my next update tomorrow.
If you have any questions about the foreign exchange rate or transferring money abroad in the meantime, don’t hesitate to leave a reply in the box below. I’d be delighted to provide an in-depth personal answer to your enquiry, free of charge.