How is Pound Sterling performing against the Euro and the Dollar and will the exchange rate hold up?
How is Pound Sterling performing against the Euro and the Dollar and will the exchange rate hold up?

The last week as been like groundhog day for Pound Sterling. A combination of factors have kept the currency in broadly the same place as it has been in the previous few weeks. Recent economic reports from the US have seen confidence in the dollar grow amoung investors, staving off expected losses against the Euro as focus shifted across the Atlantic. 

The ECB's decision to cut rate expectations and poor euro zone data both meant that sterling held up against the euro in what could have been a terrible week. 

The news that German car manufacturing figures were much lower than expected worked in the pounds favour. The car industry is held up as the barometer of the German economy and therefore the Eurozone as a whole as it's strongest member. 

Away from economic news, politics continues to dominate investors thinking. The conservative party leadership is the main focus for investors as they search for any hint of future UK policy that could have an impact on GBP. 

The fact that is has a further 2 weeks to run until we know the final outcome on who will be the next PM will place further unnecessary pressure as the market looks for certainty most all. 

Can the week ahead see the pound pickup it's lost ground?

All eyes will be on May's GDP figures as everyone looks to see if there was any stagnation in the second quarter of this year. 
The ECB's latest policy meeting minutes will also be released - the thing everyone will be looking for is signs of extra stimulus in the short term. In other words, will the ECB be pumping further money into the Eurozone to boost economic growth. 

There will also be further news from the German car industry later today. However, all focus in the UK remains on the political scene and that all important Tory leadership contest. 

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Why cash is still king – and growing in power

You might be forgiven for thinking that cash is facing a reduced role in the economy of the future. New technologies such as Bitcoin and other cryptocurrencies are snapping at the heel of the established system. Governments want to push down the role that cash plays in criminal acts, further demonising the humble cotton note.

Yet, despite all these pressures, cash is actually being used in more ways than ever.

The Federal Reserve recently released figures that highlighted the rise of dollar bills in the American economy. Back in 2010, notes in circulation made up 6% of GDP – this increased rapidly to 9% by 2018, mainly driven by the use of the $100 bill.

In 2005, the $100 bill sat well behind the $1 and $20 notes in terms of overall value. Yet at the turn of this year it shot above all other denominations.

Why has this happened? Economists believed that the financial crash in 2008 and the resulting uncertainty that spread throughout the following years has given cash the ultimate insurance status.

What’s the best way to store cash? In the highest possible bill of course. Hence, you may not actually see many $100 bills when you’re out shopping – they’re far more likely to be stashed away under millions of American mattresses.

The hoarding is not just confined to the US. The Federal Reserve believes that people across the world are hiding dollars as a hedge should their local currency dive.

One thing’s for certain - you’ll be happy if you’re a fan Benjamin Franklin because he’s never been so popular.

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