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By Jonathan Watson

The US dollar remains strong despite some very turbulent times. We have seen the value of the dollar fluctuate majorly in recent years. One of the key issues for me is the unemployment rate. Obama will have been overjoyed to see the unemployment rate fall to 9.4% for December, from 9.8% for November, the biggest drop since 1998. Closer analysis of the situation however revealed that part of the reason for this drop was that 260,000 people were actually no longer looking for work and hence removed from the total.

Nevertheless the overall economic siutation seems to be improving and longer term I expect the dollar to regain ground against both the euro and sterling. Despite sterling starting 2011 well, particularly against the euro, I would expect further dollar strength on the GBPUSD rate as their economic situation improves.

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By Jonathan Watson

GBPEUR has  improved by over 2.2% this week . The low of under 1.16 has been improved on with the rate now at just under 1.19. This is presenting a fantastic opportunity for those buying euros with sterling. The question is will it last? I now personally think it may do despite the weakness ahead for sterling. Spain and Portugal are to auction off  debt bonds in the coming weeks and the insurance and interest on these bond sales could be massive. Would you consider investing in Spain right now?

Depending on the outcome here we could see some massive losses for the euro. If you have a currency transfer for euros or any other currency why not get in touch with us to discuss the requirement? As specialist currency brokers we are exceptionally well placed to offer guidance that could save you money.

By Jonathan Watson

Sterling has made some impressive gains against the euro and a few other currencies. I suspect however these will not last long.

The UK is in a perilous position with rising unemployment and rising inflation. We have also seen profit warnings today from a number of high street retailers. With 60% of the UK’s GDP accounted for by retail sales the snowy weather may be leaving a bit more of a chill than expected!

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By Alex Ellis

Those of you based in the UK will more than likely have experienced the worst of the UK’s weather this week as inches of snow fall have hit across the country. This seems to have quietened down the market as we have literally seen sterling barely move throughout the day. A knock on affect of this snow is that UK retail sales figures are predicted to be massively affected and theoretically this week should be one of the busiest weeks for Christmas shopping.

It will be interesting to see when figures are released next what impact the figures will have on exchange rates.

By Jonathan Watson

Sterling has had a very bad week losing well over 2% against many of the major currencies. Why is this? Well a poor run of data has shown the UK’s recovery to be questionable and moreover the UK’s monetary policy to be uncertain. The UK has rising unemployment and rising inflation. This can cause a policy dilemna as the measures to combat each of these problems are at loggerheads. Let me explain why.

Unemployment is typcially a result of a lack of growth. The cure is to rejuvenate the economy, for example quantitative easing. But this will lead to the cost of goods and services increasing as there is more money in the money cycle leading to inflation. To combat inflation we typcially raise interest rates although this has the effect of curbing spending and reducing growth, which will in turn hamper efforts to control unemployment.

We can see the policy dilmena on the horizon for the MPC and this is why I feel there is extra pressure on the pound at present and why I would expect this to continue into 2011 until interest rate rises are more seriously considered.

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