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The Foreign Currency Exchange: What's The Outlook?
If you listened to foreign investors a year ago, you may well have thought the days of sterling were numbered. Certainly, currency brokers were keeping a close eye on the performance of the dollar and the Euro – both of which kicked off 2009 performing strongly on the foreign exchange. The same couldn’t be said for the pound, however. January 2009 was a month of all time lows: the sterling index hit an all time low of 73.17; the dollar rate bottomed at 1.35, and the share price at RBoS was a worthless 10p. With the banks going into meltdown as well, it was grim.
On 20th January 2009, top American investor Jim Rogers announced that sterling was finished, that the government bail-out of the banks was a bad idea, and that the worst thing investors could do was to put money into the UK. The fact that a similar case existed in the US was apparently neither here nor there.
Perhaps the government must have done something right. After a rocky start the pound recovered quite well against the dollar, heading towards the 1.60 mark in December. Overall, the rate was up by more than 9% just before Christmas.
However, what’s left of this year may still be bleak, with January seeing the pound trading below its 200 day moving average (DMA) for the first time since May 2009. The 200 DMA is a popular indicator used by the foreign exchange.
The economic outlook and foreign exchange rates remain full of uncertainty. Still, you can at least rely on us at Pure FX to get you the best possible deal on the foreign currency market.
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