Expat currency news: US dollar sinks on Fed dovishness, pound unimpressed by UK budget
If you have a foreign currency transfer coming up, securing a competitive exchange rate can make a big difference on how much you receive. [Contributed by TorFX]
While the type of international money provider you use can make a big difference to the exchange rate you secure, with some currency brokers undercutting the rates offered by banks by 90%, picking the right time to move your money is also important. Having a little knowledge of how currencies are performing makes all the difference and our brief currency update gives you the information you need to make a move at the right time.
So, what happened in the last week?
Despite stronger-than-expected US inflation the Federal Open Market Committee (FOMC) opted to leave interest rates unchanged on Wednesday, also downgrading their policy forecast from four to two interest rate hikes in 2016.
While the US dollar slumped sharply in response to this news the euro and the commodity-correlated Australian and New Zealand dollars all saw a renewed surge in demand as a result.
Chancellor George Osborne’s budget speech was met with some scepticism, although the pound was later encouraged higher against rivals as the Bank of England adopted a slightly more optimistic tone with regards to the strength of the UK economy.
Pound to euro exchange rate: GBP/EUR ends the week lower, down from 1.2902 to 1.2788
If you had GBP 100,000 to transfer to Europe your money would have been worth EUR 129,020 at the start of the week but just EUR 127,880 at the end, a difference of EUR 1,140.
Pound to US Dollar exchange rate: GBP/USD ends the week higher, up from 1.4385 to 1.4496
If you had GBP 100,000 to transfer to the US your money would have been worth USD 143,850 at the beginning of the week but USD 144,960 by the end, giving you an additional USD 1,110.
Pound to Australian dollar exchange rate: GBP/AUD ends the week lower, down from 1.9005 to 1.8972
At the start of the week your GBP 100,000 would have been worth AUD 190,050 but AUD 189,720 at the end — netting you AUD 330 less.
Pound to New Zealand dollar exchange rate: GBP/NZD ends the week lower, down from 2.1313 to 2.1166
At the beginning of the week your GBP 100,000 would have been worth NZD 213,130 but by the end you would have achieved NZD 211,660, leaving you with NZD 1,470 fewer.
So, what can you expect in the week ahead?
The biggest data event for the pound in the coming week will be February’s UK Consumer Price Index report.
Should inflationary pressure show signs of mounting then the pound is likely to be shored up, as any progress towards the Bank of England’s two percent target would suggest that the UK economy remains in a rather more robust state in spite of ‘Brexit’ worries.
Nevertheless, if the CPI indicates any renewed weakening in domestic inflation then sterling can be expected to soften against rivals, as the odds of a Bank of England interest rate hike retreats further.
The latest UK Consumer Price Index report is due on Tuesday 22 March at 9:30am GMT.
Contributed by TorFX
TorFX is a specialist currency broker that offers far better exchange rates than you are likely to receive from a high street bank.