Home -> Money Matters [Back to previous page] Foreign Exchange Market Overview - 3rd June 2010 (editorial by purefx.co.uk) Is this the beginning of a sustained recovery for sterling? Sterling Overview May was certainly a roller-coaster of a month for the value of sterling. On some days we witnessed exchange rate swings in excess of 2%. To put this into context on a normal day one would expect to have 0.5 to 0.8% movement on a major currency pair like GBP/EUR. Why? Well the General Election at the beginning of the month had a large impact, and after initial losses as the prospect of a hung parliament became evident, the Cameron / Clegg coalition government has been well received by the markets. Along with a positive feel for the new government Q1 GDP was revised up from 0.2% growth to 0.3% helping to further support the pound. Elsewhere economic data has broadly speaking come in on par during May, however there was a big surprise in a major reversal for CBI distributive trades survey from +15 in April to -17 in May as retailers are anticipating a fall in sales volumes over the next three months. Given the situation in eurozone over countries with very high budget deficits (most notably Greece, Spain and Portugal) it would be unwise to speculate that the UK is immune from a similar fall in confidence. However with an emergency budget later this month and the prospect of heavy cuts in public sending, we would like to think the pound would begin to gain in value as the UK deficit is reduced. As always for a more detailed opinion please contact your currency dealer directly.   Pound / Euro I am struggling to keep this summary a summary in the sense there has been so much going on in the eurozone to tell you about. In our commentary last month we speculated there was a danger that Spain could loose its AAA credit rating. I can confirm Fitch ratings agency has indeed downgraded Spain to AA. Furthermore German Chancellor Merkel has banned short-selling of certain financial instruments in order to try and offer some protection against market speculators. Some might say all this has done is raise the question “What does she know that we don’t?” So to summarise (if I can) the sovereign debt issues in Greece look as though they might spread to Spain and Portugal. As such the euro will remain under pressure against many currencies including sterling.   Why use a Currency Exchange Specialist such as PureFX and not just the facilities provided by a bank? You wouldn’t make a large purchase in the UK whilst not knowing the final cost but by the time you have read this your exchange rate may have changed 25 times and in the space of one day currency values can move by over 3%. This means if you are buying abroad the price of your purchase is changing by the same amount and on €100,000 you might need to find an additional €3000 to cover this loss. We can help you get around this problem by securing the rate today for a time in the future. Contact Purefx if you would like to discuss your Currency Exchange requirements or receive a competitive quote. Email mailtoenquiries@purefx.co.uk: Web www.purefx.co.uk Please note, nothing in this "Foreign Exchange Market Overview" should be construed as advice or guidance as to when to buy or sell currency and / or property Euro to Pound Exchange Rate (updated daily) Scale (1 euro approx 1.22 pounds)