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Watchers of the currency markets may remember the time when the Pound was seen as a ‘safe haven’ for funds, and more recently the Euro. Today it is a completely different scenario.

As you are probably aware, debt levels in both the UK and Eurozone have reached record levels. This has brought about the question that will banks and nations retain their current credit ratings. This week Deutsche Bank had its credit rating downgraded two places by rating agency Moody’s, and the focus it still firmly on both UK banks and the UK economy as a whole on whether the coveted AAA rating will remain intact.

What does this mean for these entities however? In general terms, it means less preferential repayment terms on debt; a factor which leaves investors looking elsewhere. This is where the US Dollar has come to the front of the queue of currencies looking to be classed as the ‘safe haven’. This most certainly has been the case, and GBPUSD and EURUSD exchange rates have reacted accordingly.

A question I ask you is how long do you think it may be before the uncertainty surrounding the UK and Eurozone disappears? That may be the key thing to think about whilst watching the cost of buying US Dollars increase. If you need to buy US Dollars, can you afford for the rates to fall?