The economic headlines have been stolen by the negotiations over the US debt ceiling for the past couple of weeks leaving investors running for cover and the safe havens of the Swiss Franc and gold.
Talks in the US have been dominated by politics with both the Democrats and Republicans digging their heels in. The Democrats wanted the plan to include higher taxes whereas the Republicans wanted deeper cuts in public spending. However, yesterday (02/08/11) some relief was brought to the market as the deal was finally signed into law by Barack Obama just hours before the federal government officially ran out of money. This removed the threat of a credit default but the focus remains on the US with the possibility of their credit rating being downgraded from its current top notch AAA rating.
Even though The US has dominated the news there has been plenty of things going on in other areas of the market. The UK continues to churn out poor economic data as GDP growth came in at a miserly 0.2% for the past quarter and manufacturing PMI released showed that manufacturing activity had contracted over the past month. This is heaping pressure on both the UK government and the Bank of England. As the UK economy’s recovery is looking more and more fragile there is talk of further quantitative easing and other measures being brought in.
On top of that the European debt crisis continues to rumble on as the fear of contagion looks more and more realistic with Cyprus being the latest economy to face the threat of a credit default. On top of that Italy and Spain are becoming increasingly likely to require a bailout in the near future.
All of these events have led to massive volatility in the currency markets. A prime example of this has been the £ against the US$ as over the past week it has traded between a range of 1.6223 and 1.6474. An almost 3 cent range has caused havoc for anybody looking to make a transfer however this isn’t the only currency pair which has seen such moves. The large ranges can obviously have costly affects on people buying property for example so now is the time to speak to companies that specialise in currency rather than leaving it to the last minute.
This article has been provided by Escape Currency plc who have grown into one of the leading brokerages in this field since their inception in 2003. This has been thanks mainly to personal recommendations which are as a result of the excellent service they provide. They have also assisted a number of Connect2Law members helping them save their clients and practices money when exchanging foreign currencies.
If you have any questions please feel free to contact Dominic Butcher on +44(0)1296 339811 or dominic@escapecurrency.com or visit the website www.escapecurrency.com.
You can also follow us on twitter @escape_currency.
