Sterling has recovered slightly against the USD after last week’s Federal Open Market Committee (FOMC) minutes caused GBP/USD to fall from 1.5670 Wednesday evening to 1.5345 yesterday morning. This was a move of over 2% and put GBP/USD back to levels last seen at the end of May. The reason the FOMC minutes caused such a stir was the unexpectedly optimistic forecast on growth, the economy and employment. Most importantly the Federal Reserve of America added that they could begin to scale back their economic stimulus plan at the end of the year.
What does this mean and why does it affect the rate?
The reason that the rate moved lower off the back of this announcement was because the global markets have been relying on money from central banks to keep share prices and commodity prices rising. Once the “Tap” looks like it is being turned off so to speak, everyone gets a little nervous and heads for what they perceive as a safe bet, in this case the USD and so we see a brief strengthening of this currency across the board.
Since yesterday lunchtime the rate has been slowly moving back upwards and we now sit in the mid 1.54’s with a move back over 1.55 on the cards in the near future. The U.S. and UK GDP figures are out this week on Wednesday and Thursday respectively. Given that the recent data out of the UK has been better than expected I would think this should be a positive number, whereas the opposite can be said for the U.S. whose recent set of figures has been disappointing. So how will this affect the rate? I would expect we will be in the mid 1.55’s by the end of the week perhaps 1.56 if the U.S. GDP figure is well below expectation, in short, this is a good time for those holding dollar deposits and might be an opportunity to diversify away from any large holdings.
Most Expats, understandably go through their banks when they need to make foreign payments for the sake of convenience.
However, the Banks will often charge anywhere between 2.5% – 3% off the interbank rate for exchanging one currency into another. Combine this with charges on top to make an international payment and suddenly moving your money becomes very expensive.
There is a choice though, banks are not the only provider of exchange rates and as an FCA authorised institution with 8 years of experience in dealing with contractors we can guarantee to save you money each and every month.
Aston Currency Management will offer expats that work through Brunel a special, fixed rate of exchange of around 0.8% off interbank. This will equate to an average saving of 1.7% to 2.2% on every transaction you make. Over the course of a year for an average contractor, this can add up to in the region of $3000.
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