The outlook for the euro looks uncertain as the debt crisis continues to throw up all manner of different issues for the single currency to contend with.
By Luke Trevail of TorFX
The longer term picture is unclear, but throughout January the Merkel & Sarkozy ‘coalition’ cemented itself as the leading factor in deciding, influencing and potentially commanding what direction the euro-zone takes from here.
This outcome is largely yet to be determined but from a currency point-of-view the markets do not like this uncertainty, with only a glut of weak UK fundamentals keeping rates against the pound below €1.20 (0.833) this last couple of weeks.
January saw UK economic growth shrink by more than expected throughout quarter four of 2011, posting a -0,2% contraction. Two quarters of negative growth to an economy is the definition of a recession and it’s this rather worrying banana skin that’s keeping the pound at bay for now.
It’s fair to assume however that for anyone who is looking to buy the euro over the coming month will potentially get a better rate than where we are now as the euro will likely continue to suffer from ongoing difficulties that may drive the market higher.
This should sound as a warning for anyone who is sat with euros and wanting to get these moved back to the UK as the threat of a move up towards €1.25 could be on the cards.
Using a specialist FX broker such as TORfx will allow you benefit from trading options that are not available through the bank such a limit and stop orders which are designed to achieve you a better rate than what’s currently available while protecting you against any adverse moves along with forward buying options which allows you to secure a rate based on where the market is now and pay your money to us for ongoing exchange at a date in the future.
As we bid farewell to January, the next few weeks will prove pivotal in deciding how the fall out of the Euro Debt Crisis will affect the currency markets. Volatility will be key, so the advice to keep abreast with the current market, rather than lovingly remember rates of years gone by is, as ever important in determining what worth your money can command.
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