Good morning. So.. the consumer watchdog has decided not only to put in a complaint, but a ‘‘Super Complaint’’ on the way banks handle foreign currency through a ‘cocktail’ of complicated charges and fees. Quite right too in our opinion. Amusing interchange of the day goes as follows:
“It doesn’t matter how much money you start, if you exchange it seven times you’re left with absolutely nothing”
“At least when you get mugged on the street they normally have the decency to pull a knife first.”
Which is why we suggest you compare travel money prices to get the best deal at our sister comparison site MyTravelMoney.co.uk!
Wednesday was a bad day for Sterling as it hit an 8 month low against the greenback and 2½ year low against the Japanese Yen after minutes of Bank of England’s MPC showed a possible quantitative easing in October. The UK government borrowing rose unexpectedly by £1.9 billion in August, paving the way for another round of monetary easing as the economy starts to show signs of slowing down. The GBP/USD pair selloff has continued overnight touching a low of 1.5448.
After the US Federal Reserve decided not to increase money supply further, the dollar strengthened yesterday. The Fed unveiled ‘Operation Twist’ instead, a program that plans to boost short term consumer demand by putting downward pressure on long-term interest rates that is expected to help the ailing housing sector. Short-term debt worth $400 billion will be sold to fund long maturity liabilities that are expected to help consumers refinance mortgages at a lower rate.
The US banking system is not out of the woods yet it seems. Ratings agency Moody’s downgraded Wells Fargo, Bank of America and Citibank stating that government help would be hard to come by should the banking sector fall into crisis again.
CURRENCY RATE OVERVIEW
GBP/EURO – 1.1416
GBP/US$ – 1.5491
GBP/CHF – 1.3961
GBP/CAN$ – 1.5671
GBP/AUS$ – 1.5473
GBP/ZAR – 12.7145
GBP/JPY – 118.71
GBP/HKD – 12.0830
GBP/NZD – 1.9418
GBP/SEK – 10.534
Euro: The common currency gained towards early trading yesterday after Greece announced further deficit reduction measures. However, the scenario changed post-FOMC announcement and the greenback gained against both the GBP and the Euro. The GBP/Euro pair went down to 1.1370 in mid-afternoon day trading after MPC details showed a possible QE in October.
USD: In the US, the dollar gained 0.2% against the euro as investors continues to choose safe haven currencies. Also better than expected home sales data, existing sales grew 7.7% last month, supported the greenback further. The dollar index – a performance measure against a basket of currencies, jumped to 78.13, its highest since February.
Elsewhere the AUD and NZD lost ground against the USD yesterday, boosting the GBP/AUD and GBP/NZD pair to 1.5400 and 1.9400 respectively.