When it comes to personal finances, most people don’t think much about exchange rates until they are about to go holiday overseas, but there are sound reasons why investors should pay closer attention.
Since Christmas, the pound has strengthened against the dollar and other currencies. A pound was worth $1.27 in December, but it was worth $1.33 by the end of February – a rise of 4.5%.
We don’t often cover the topic of currencies, given that as a rule we endeavour to keep the level of currency risk in our portfolios contained. This is on the basis that currency moves are relatively unpredictable and there’s no long-term expected return from an overseas currency. However, from time to time markets appear to bake in a consensus that seems inconsistent with the facts.
Those with a penchant for gold might be relieved to hear that it is still likely to gather momentum, according to experts.
Dovish minutes from the US Federal Open Market Committee (FOMC) reignited speculation that a third round of quantitative easing (QE) may be in the pipeline for the US.