FINANCIAL REPORT FOR WEEK COMMENCING MONDAY 11th April 2011
Why the pound in your pocket is disappearing?
The last 3 weeks or so has seen the pound trade against the euro from lows of 1.129 to a high of 1.1650 which has quite an impact on any money you transfer. Pretty good news though if you are sending your money back to the UK . The recent change in rates means that if you are transferring a £1000 instead of getting around 1150 euros you will probably receive today around 1120 euros, it doesnt sound a great deal but multiply by 12 and all of a sudden you have lost at least 360 euros per year.
Now why is this happening?
You have no doubt read quite a bit about all the problems in the Eurozone, not least recently with Portugal having to go cap in hand to the ECB and IMF for a bailout and the rumour mill still persists that Spain will follow. Nobody is too sure if this will happen, what we do know is that Spain certainly is trying to manage its economy in a far stronger way than Portugal had been. It has introduced a string of measures to tackle the problem by increasing taxes etc and it hopes to avoid non repayment of its debt.
-The interesting time will come at the end of ths month when its due to pay back interest on funds raised earlier.
Whilst much has been said about the eurozone the UK has unfortunately been creaking a little and ocassionally this goes unnoticed by the general public although a quick look at the rates of exchange will confirm all is not right in the UK.
Consumer confidence is low, retailers have been issuing various profit warnings and just recently have announced the lowest March retail figures for a considerable time. Manufacturing sector is also showing concerns due to the increase in raw material costs. Add this to the poor housing sector with an insufficient number of new mortgage applications and you start to answer, why the pound is performing so poorly.
Generally people in the UK are attempting to pay off their debt as they are concerned about the possibilty of interest rate hikes and the impact on their pockets, they are paying off debt rather than incurring it . Of late eyes have also been focussed on the UK banking sector as the Independent Commission will soon publish its report on the Banking sector. The aim will be to ensure the British taxpayer will not have to bail out the banks in the event of another crisis. One of the views is that It appears the banks will have to ring fence customer savings and deposits from any high risk future investments. Further far reaching proposals will be included so keep your eyes open for the publication of this report.
With the recent interest rate hike in the Eurozone and the concerns in America it is clear that investors have an appetite for the euro hence the additional reason for its strength as it at the moment the favoured currency. Against the dollar it has recorded recent highs of 1.4490 and the probabilty of going beyond this figure is not that far away.
As with all things the market can change quickly so if you don't need to change your money now then it may just be worth the wait. Are you a gambler?
So if you are looking to gain the most for your money why not contact Moneycorp the foreign exchange specialist who can take care of all your money transfers to and from Spain; however small or large. Their experts make the process quick, easy and highly cost-effective. For more information on how Moneycorp can help get you more currency than from your bank contact Michael Campbell in the Costa del Sol office on +34 951 319 700 or email michael.campbell@moneycorp.com Always quote Destination-Sotogrande.
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