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The Bank of England, ECB, Federal Reserve, Bank of Japan and Swiss National Bank have all agreed to offer unlimited dollar liquidity to the failing European banks. This kind of offering will obviously cause large movement on the currency markets in the short term however my real fear is the cost this pledge will have to trading levels on non EUR pairs. For example analysts predict GBP/USD rate is likely to be pushed to 1.55 and in my mind could even be pushed to 1.50 over the coming weeks.

If you have any upcoming USD requirements and want to protect yourself from adverse currency movements please contact me on asp@currencies.co.uk to discuss how forward contracts and limit orders could cover your risk.