As we enter the New Year we are still dealing with the after effects of 2008’s excesses.

Credit is still tight, rates (and people) are depressed and sterling has endured a terrible Christmas period.

After the momentous falls and the flight towards parity the recent days’ gains that sterling has made against the single currency have been heartening and have strengthened our views that sterling is in for a good year against both the US dollar and the euro.
 
Below is a table of where we believe rates will be over the coming 12 months at quarterly periods:

 
Chief economist, Jeremy Cook, at foreign exchange broker World First, says,

“The New Year is normally a busy time for most businesses as budgets are decided and the upcoming financial year is planned.

SMEs will undoubtedly want to have a clear idea of how much in sterling terms their overseas revenues are going to bring in or purchases cost. The best way to secure minimum incomes and maximum costs is to hedge your foreign currency exposure.

In the form of foreign currency options, hedging tools allow SMEs to eliminate currency risk while still allowing them to benefit from any positive movements.
 
“For example, if you are going to have to pay a supplier euros in six months’ time, you can guarantee a minimum sterling cost for those euros now but if the rate moves as predicted, you can purchase those euros when you need them for less.
 
“Losses or gains made on currency movements could make the difference between business success or failure in 2009.”

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