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Going on holiday? Hot sun, sandy beaches, exotic food and foreign currency. Although going on holiday is great, sometimes the foreign money is a bit confusing:
How much does that bikini cost?
is it cheaper to buy abroad or back home?
Am i paying more or less for petrol?
Luckily most of Europe now uses the euro which makes it less confusing than it used to be.
THERE IS A MOOD OF CONFIDENCE IN THE AMERICAN MARKET BUT GREECE IS STILL CAUSING CONCERN IN EUROPE?
There is an underlying mood of confidence in the near term american markets because of the economic outlook with industrial surverys especially robust.However the Dollar will find it difficult to make headway, it has however strengthened to a 12 month high against the Euro.Sterling has proved broadly resilient against the US Dollar and has managed to recover from a dip towards 1.5250. What is troubling the markets most is the problem of Greece.Although an agreement seems to have been sorted out between the EU and IMF the member states do not seem that keen to support the loans that Greece so urgently needs. The Germans have agreed in principle but there is a challenge in the German courts to stop the loan.Also few of the commentators think that the Greek people will put up with the austerity measures that everyone requires of them. The Greek Unions will not lay down over this one.There is a lot more to happen before this is ettled and its just the first round. Greece will require hundreds of millions of Euros more before this mess is over. Most analysists think it will have to leave the Euro and many are betting on it happening sooner than later. There are still fears that the Euro is overvalued while there are fears of underlying internal stresses apart from Greece their is Portugal, Spain and Italy all having problems with debt. These problems will become more apparant once the Greek question is settled.As any of you who have traveled recently will know, inflationary pressures are also showing signs of making the Euro more volatile. You get far less for your money when you buy abroad, especially in the tourist spots.France is particularly bad as inflation coupled with the week pound has made it very expensive to travel there.Other places reported to be expensive are the Canary Islands a favourite haunt of summer sun .
THE UK POUND
We have seen the Pound rise slowly to its highest levels against the Euro and Dollar recently but we must not become used to a high rate of exchange benefiting our European travel.There is an election to see through before and if we get a stable parliment.If it is hung then we have real trouble, the gamblers are sitting and waiting to pounce, if they get into the market the pound could nosedive. The UK economy is just one of the lame ducks of the world markets at this time but in Europe it ranks very high in terms of its vunerability,analysts believe we are going to have to experience severe pain for the forseeable future. Our economy is still in a mess and the currency markets only see us as a gamble,and in the short term at that.There is no faith in what may happen and with possible more nasty news to come, it would be foolish to try and predict even over the very short term what may happen.Each day seems to bring bad economic news and the rising un-employment levels are a real problem some pundits believe the true rate of unemplyment is nearer 4 million, which will not go away in the near or middle term. We need to see houses start to sell again to bring back stability to the markets.