Currency Update August 2011

Published on 17/08/2011 in Your Spanish Home

In recent weeks we have heard a lot talk about the state of the global economy; a lot of attention was focused on the date 2nd August 2011. Why I hear you ask; well, our American colleagues had to come up with a plan to avoid a federal debt default.

Fortunately the US House of Representatives passed a vote of 269 to 161 which some critics may say was a last-gasp deal to avoid this default. It raised the debt limit by up to $2.4tn (£1.5tn) from $14.3tn, and makes savings of at least $2.1tn in 10 years.

But of late the decision has been questioned as to the whether the limit should have been raised by $4tn thus allowing longer term stability for our American colleagues and possibly avoiding the recent downgrading of their credit rating from their much valued AAA status. This downgrade could have a longer lasting effect on Bond Yields for the US.

Good news though coming from the UK as the construction industry grew a faster-than-expected by 2.3% in the second quarter of the year compared with the previous three months. This new data which came from the Office for National Statistics (ONS) marks a rebound from a slump seen by the industry over the previous six months.

However all is not well as we hear with recent comments from George Osborne warning that excessive global debt meant "the recovery will take longer and be harder than hoped" Could this be why people are holding onto their hard earned cash and saving it for a rainy day?
Mr Osborne seems to be defending the government's austerity plan in the Commons, saying it had made the UK a "safe haven" in the volatile financial markets.

Euro calculatorIn Switzerland, according to the Tages-Anzeiger daily, the authorities are flirting with the idea of pegging their currency to the euro. The franc had strengthened by nearly a third since the beginning of the year and thus having a negative impact on exports. During this time investors used the story as an excuse to take some profits on their long-franc positions, which took the currency three cents lower against the US dollar, four cents down against the euro and knocking five cents off its sterling value.

The euro zone has also seen its fair share of problems and possible threats.

Could there be another rescue package on the cards for Greece? We will have to wait and see. Add this to the problems in Portugal, Italy and possibly Spain alongside the threat of a downgrade for France, you start to get the picture that all is not well within the global economy.

In the last couple of weeks we have seen the Pound to Euro exchange rate fluctuating between 1.13 to 1.1450. The last low of 1.11 was at the beginning of July 2011 when the euro was at its strongest. So knowing how volatile exchange rates can be it is always worth getting the right guidance on the currency market.

If you want to learn more about how you can save money on your currency transfer: contact our preferred currency exchange partner Moneycorp as their local experts are always happy to speak to you. Contact Michael Campbell on +34 951 319 700 / 628 869 981 or email:  do not forget to mention Eye on Spain 

Written by: Moneycorp

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For more information about how Moneycorp can save you money when sending money abroad, please visit the dedicated Eye on Spain/ Moneycorp website.

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