Expat currency news — Pound weaker after Osborne suggests UK economic growth under threat
While the type of international money provider you use can impact the exchange rate you secure, with some currency brokers undercutting the rates offered by banks by up to 90 percent, 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 last week?
The New Year got off to a turbulent start as stock markets dropped sharply in response to the latest signs of slowness in the Chinese economy, with higher-risk currencies such as the AUD and NZD weakening substantially.
Even so, the pound was pushed lower during the latter half of the week after Chancellor George Osborne warned that UK economic growth faced a ‘cocktail of threats’ as global conditions look set to deteriorate.
While Eurozone inflation failed to increase towards the European Central Bank’s target of two percent the euro was given a boost as the Eurozone was found to have grown at its strongest rate in four-and-a-half years and domestic unemployment dropped.
Pound to euro exchange rate: GBP/EUR ends the week lower, down from 1.3602 to 1.3391
If you had GBP 100,000 to transfer to Europe your money would have been worth EUR 136,020 at the beginning of the week but EUR 133,910 at the end — leaving you with EUR 2,110 less.
Pound to USD exchange rate: GBP/USD ends the week lower, down from 1.4776 to 1.4536
If you had GBP 100,000 to transfer to the US your money would have been worth USD 147,760 at the start of the week but USD 145,360 at the end.
Pound to AUD exchange rate: GBP/AUD ends the week higher, up from 2.0234 to 2.0827
At the start of the week your GBP 100,000 would have been worth AUD 202,340 but AUD 208,270 at the end, netting you AUD 5,930 more.
Pound to NZD exchange rate: GBP/NZD ends the week higher, up from 2.1582 to 2.1987
At the beginning of the week your GBP 100,000 would have been worth NZD 215,820 but at the end you would have achieved NZD 219,870, giving you an extra NZD 4,050.
So, what can you expect to happen in the week ahead?
The biggest event for the pound in the coming week will be the first Bank of England (BoE) interest rate decision of 2016.
If members of the Monetary Policy Committee show a greater willingness to raise interest rates at some point in the coming months then the pound is likely to rally across the board.
However, if the vote remains split at 8-1 and policymakers in general take a more cautious view on the economic outlook of the UK demand for the pound can be expected to weaken.
The BoE’s interest rate decision is due on Thursday 14 January at 12pm GMT.
Contributed by TorFX