Good afternoon,
The pound continues to fall despite the increase in risk aversion in the markets which, in theory, should be pound supportive.
We are in danger of going back to the sub 2.00 rates that we started the year with.
A higher than expected inflation report in NZ has sparked speculation that the NZRB may increase NZ interest rates quicker than was forecast, strengthening the NZD at a time when data out of the UK continues to show, at best, a patchy economic recovery.
Given the consensus is that the Bank of England will not move on UK rates until the end of 2011 at the earliest, the pound is left vulnerable.
It may therefore be best to at least hedge your bets and secure some of your requirement sooner rather than later.
I remember all too well the summer of 2009 when the pound first fell below 2 against the AUD. Most clients held off until it went back up and the truth of the matter is that we now trade close to a 29 year low at 1.52 and with the expectation of a further increase in Australian interest rates as early as next month which, all other things being equal, would send the pound down into the 1.40’s
Commentary by Tony Redondo
“Any opinions expressed in this document are those of TorFX analysts. Any analysis and/or forecasts provided are aimed at helping clients understand market conditions and developing trends. Clients are wholly responsible for their own trading decisions.”
