1.40 Breached once more! (Joshua Privett)

Today saw incredible gains for Sterling across the board with all major currencies.  Sterling is now back and comfortably inside 1.40 after breaching the initial resistance this morning, as well as above 1.50 against the USD. The presence of rates like this to purchase, particularly with our election now only a few weeks away is staggering. The uncertainty of such a closely fought election will become telling on rates in the near future. The fact that the SNP is becoming a major player in this, with the Scottish Referendum just a short time ago cause Sterling to crash, is making this future crash more and more certain.

Historically, this is the period when the rates start to tumble slightly. Two weeks or so before citizens head to the polls. Today the rates moved up across the board due to positive minutes from the recent Bank of England meeting.  Their apparent surprise at the sudden representation of poor data in the American economy is why the gains against the USD were larger than most except for the Euro.

What some financial forecasters are beginning to ponder however, is that these rises indicate an even larger drop to follow. Frankly, these rates are don’t make sense in a logical market. The certainty of no clear front runner, a necessary coalition, and the inability to forecast British financial policy beyond May, makes all this flight into Sterling from other currencies an indication of more unconventional investment policies.

The currency markets are mainly moved by banks, who speculate billions daily on shifts in currency value. Buying at the low and selling at the high to make their profit. Once thing they can do is ‘go short’. This is a term where a currency is borrowed, like Sterling, with the promise that it would have to be repayed back later. However, if Sterling loses value later, then this debt would be very cheap to pay back. The election looming makes this a very safe bet. So when these investors do decide to sell off their Sterling for profit, the snap-back in the markets will likely be extreme to say the least.

As I said these current rates are an incredible opportunity. Personally, if I had a requirement to use Sterling as a purchasing currency for Euros, Dollars, etc, then I would not hesitate a moment longer. Waiting any longer will be a gamble that could only have a small pay off, or a large loss. The rates can be pegged at these historic levels for up to 12 months, call through to the trading floor on 01494 787 478 and ask for Joshua, or email me overnight on [email protected] to discuss your situation in more detail.