Forex News: Pound-Euro cat and mouse

Markets have continued to be volatile with the pound-euro rate playing an unwelcome game of cat and mouse as fundamentals vary in favour of one currency and then the other with the pair being range bound throughout September.

By Luke Trevail of TorFX

Recent news from Spain will likely weigh heavily on the ability of the Eurozone to ignore the problems from within its ranks, and the threat of contagion to other countries needs to be a consideration of the ECB.

The austerity budget for 2013 was set out by Spain this week with a freeze in public sector pay for the third consecutive year prompting riots on the streets of Madrid, which given the grim situation of the economy may only compound the woes over at least the next year.

News that the Spanish economy shrank in quarter 3 of this year coupled with the street protests rattled stocks earlier this week and the influence of this onto the wider economy will likely undermine the single currency and weaken it towards levels to near the July high of €1.2860.

Advice to currency buyers would be to be aware of the volatility that are likely to expect over the coming weeks and keeping a close eye on the foreign exchange markets can make a huge difference in what your pound will buy you in Spain.

There are those out there who are still hoping for the euro to strengthen, making the transfer of funds back into the pound a more attractive prospect. Although no-one can second guess what will happen, this strategy clearly carries risks, so at best you should proceed with caution and consider the risk in waiting compared to the reward in fulfilling your obligation now.

Luke Trevail is a foreign-currency broker working for TorFX, a forex broker established in 2004 to provide foreign exchange and international payments to both individuals and companies. TorFX is authorised by the Financial Conduct Authority under the Payment Service Regulations 2009 for the provision of payment services. Their FCA number is 517320. To verify their authorisation, you can visit the Financial Services Register and search the register using their FCA number.

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