Staying up to date with the latest currency news can help you determine the best time to move your money and maximise the returns on your currency transfer.
What’s been happening?
The past few weeks have seen the currency market rocked by rising energy prices and concerns over how this could impact the global economy.
The Euro has been particularly vulnerable to this, with the growing threat of a European gas shortage this winter stoking fears the Eurozone could slip into a recession.
GBP exchange rates have also been influenced by energy price concerns, with markets fearing consumer spending could collapse as households face a sharp increase in prices in October, with concerns over a lack of action from the government exacerbating these concerns.
However the most notable movement in the Pound came in the wake of the Bank of England’s (BoE) latest interest rate decision. While the BoE accelerated the pace of its rate hikes, GBP investors were spooked by the bank’s recession warnings.
Fears of a global slowdown have helped to underpin demand for the safe-haven US Dollar in recent weeks.
However, fluctuating Federal Reserve rate hike expectations have infused some volatility in USD exchange rates, particularly in the wake of a weaker-than-expected US inflation reading.
What do you need to look out for?
The next few weeks will likely see movement in the currency market dominated by central bank rate speculation.
Stronger-than-expected UK inflation and wage growth figures are fuelling expectations for another 0.5bps hike from the BoE in September, which could help to underpin the Pound in the coming weeks.
Whether or not the European Central Bank (ECB) will pursue another 50bps hike will be a key focus for EUR investors in the coming weeks. Any hints that the bank may opt for a more cautious increase could act as a headwind for the Euro.
In the meantime, the Fed will hold its annual Jackson Hole symposium at the end of August. If the US central bank offers any hints that it may slow the pace of its monetary tightening or it is concerned about a slowdown in the US economy then the US Dollar may weaken.
Protecting your transfers from currency volatility
With the outlook in the currency market looking increasingly uncertainty you may want to take steps to protect your transfers from any potential currency volatility.
While many people rely on their bank to handle their international transfers, banks generally operate on higher margins, meaning less competitive exchange rates, and they don’t offer the same support and services as some specialist brokers do.
With a leading currency broker like Foremost Currency Group, you’ll likely secure a better exchange rate, along with expert guidance and different services that allow you to mitigate the effects of market volatility.
One particularly popular service is the Forward Contract, which allows you to fix the current exchange rate.
While locking in a rate in this way would mean you'd miss out if the exchange rate strengthened, your transfer would be protected from any negative market movements. Making forward contracts perfect for anyone going through the often-lengthy process of buying or selling a property.
To find out more about how you could save money and protect your currency transfers contact Jack Wiles at JSW@FCGWORLD.CO.UK, +44-1442 892 073 or +44-7720088962.
Disclaimer: The information provided in this article is being provided solely for informational purposes and should not be construed as investment, tax or legal advice.