GBPEUR: In the last 24 hours the Irish Government has announced an €80 billion bailout package with the EU and IMF. However, the euro has not risen against sterling in spite of this announcement, and exchange rates have been stable.
GBPUSD: The foreign exchange market has been focused on developments in Ireland in the last week. This means recent economic announcements in the US and UK have been overshadowed by the euro-zone situation.
This morning the Irish Government announced it had requested an EU-IMF rescue package to refinance its banking sector. In addition, the Irish Government is pursuing a €15 billion austerity budget to stop this situation recurring. These announcements have improved market sentiment toward the euro, and the common currency has risen against the dollar. However, the medium term outlook for the euro is uncertain: the debt situation in Portugal and Spain remains unresolved.
This morning exchange rates are still being determined by events in the euro-zone rather than domestic happenings in the UK. This looks set to continue early this week: few announcements are expected from the UK and US today.
Over the weekend the Chancellor George Osborne announced he would aid Irish refinancing with a £7 billion contribution. However this has had little effect on exchange rates, and with no significant economic data released today we expect to rates to remain range-bound.
In the last 24 hours the dollar has weakened against the euro. This is partly because of improved market sentiment toward the euro. However, economic announcements from the US today are not expected to be optimistic. For instance, the US housing market remains unsteady: though mortgage rates are low banks are still cautious about lending. Hence sentiment toward the dollar is less optimistic for the present.
Upcoming This Week
Main potential market movers this week will be Q3 GDP figures from US, UK, EU and Germany. Clearly any deviation from forecast will push pressure on respective currencies. We anticipate growth to be lacklustre apart from Germany where the last GDP figure was way above market expectations therefore could give euro support.
How will this information affect your international money transfers?
To get the best advice contact one of our expert currency dealers on 01494 671800 (UK) or +44 (0) 1494 671800 (Abroad).