Exchanging currency
With money changing hands worldwide it is important to have a good idea what the value of your currency to another is. Businesses and people sending money back and forth between the United Kingdom and the United States need to have a good idea of what the future holds with the value of these currencies when coming up with business rates for international services.
Right now, as of this writing on September 8th 2010, 1 British Pound Sterling will get you 1.5447 United States Dollars. The value of the United States Dollar compared to the British Pound Sterling is expected to fluctuate quite a bit over the next six or so months. For October, November of this year the rate is expected to go up to 1.56 United States Dollars per British Pound Sterling, and beginning with the Holiday season in December it is expected to go back down eventually in March of 2011 reaching as low as 1.416 United States Dollars for one British Pound Sterling. Most economic forecasts support this prediction, with some even predicting that the rate will fall as low as 1.2 United States Dollars per British Pound Sterling.
This is bad news for many American Businesses trying to sell products and services in the United Kingdom. With the rate going down its going to fuel more cutbacks by companies on the world market causing an even higher unemployment rate in the United States. For businesses in the United Kingdom this will however cause business to go up – so it actually may cause more business for those in the United States supplying those in the UK. It’s hard to say at this point and it really depends on how steep the 2011 decline is expected to be.
For those who are currently invested in the foreign exchange markets I would not pull out your investments to quickly. I think link anything over time this will correct itself. I believe those that are purely invested in the UK/US foreign exchange market should definitely diversify and consider looking at the Asian markets, particularly China and Japan who are actually doing quite well economically right now.