Sterling has fallen against the dollar and euro

And it may slip even further

By TTM on 07 July 2009 in News

Sterling has fallen against both the dollar and euro this morning after weak data about the UK manufacturing sector and the Bank of England’s expected increase in quantitative easing, says foreign exchange trader Currencies Direct.

Mark O’Sullivan, director of dealing at Currencies Direct, said: “Following news of a further 0.5 per cent decline in the UK manufacturing industry, sterling has slipped to $1.6150 and €1.1600.

“And with the market expecting the Bank of England to increase its quantitative easing programme by £25 billion this week there is further concern over the pressure sterling is being placed under. With unemployment figures continuing to rise and government debt increasing by the day, sterling could soon buckle unless economic numbers start to improve.

“However, for the moment sentiment still remains behind sterling and if the market does not get spooked by the Bank of England’s announcement this week then it could resume an upward path against both the dollar and euro.”

Mr O’Sullivan added: “You also have to wonder whether quantitative easing is being used by the Bank of England to recapitalise the balance sheets of UK banks. With over 90 per cent of the Bank’s purchases targeted at the gilt market rather than the widely anticipated corporate bond market this means that there is still very little liquidity finding its way into the real economy - with bank lending to the commercial sector falling 3 per cent in the last quarter.”

Comments

Peter James, pjmail@gmail.com

Hello Mark o'sullivan

As a long term customer who has been with currency dirct for about ten years i was a bit upset when i last phoned up for a large deal on the GBP/EUR pair and the rate i was given by your broker was 2.5% above the exchange rate.

I contacted another currency broker to find i could get a rate of 0.75 above the mid price and sent yourselves an email to complain but did not get a reply which makes the gurantee worthless.

When i questioned the broker about this large profit margin he wanted to go on about interest rates might rise in the UK but that has nothing to do with the current spot price and i would like to know how you would like to resolve this isue.

23 January, 2011


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