Weekly Pound/Euro & Pound/Dollar forecast

Monday 24th December 2012, Christmas Eve.
Good morning. Firstly I would like to wish everyone including my regular readers a very merry Christmas and a Happy New Year! Today I will take a look at last weeks movements, and what may happen this week. 

In this week’s Report:

•  Pound/Dollar rates reach fresh 1 year high
• Sterling/Euro is still near lowest since May 
• Round up of the week’s other data that may affect rates

Sterling vs. Euro; 

A much quieter week last week as expected with the run up to Christmas as investors unwound positions and the markets generally traded flat. On the Sterling v Euro cross we saw only half a cent between the high and low of the week as the mid-market generally hovered around the 1.2275 level. 

On the data front there were mixed readings from both sides of The Channel as UK inflation read slightly higher than expected and German IFO Business Climate figures were released slightly higher also. 

Wednesday’s main release was the Bank of England minutes from the December meeting where the 9 member MPC voted to hold interest rates at the current all-time low that we have been at since March 2009. The vote on the asset purchase programme (QE) however showed one of the members voting for a £25million increase in the current level which shows that we could perhaps see more QE next year should the current growth levels not be sustainable. 

This started to weigh on Sterling and bought it down from a weekly high of 1.2325. Thursday came with a drop in monthly UK retail sales which will probably be better next month with the Christmas period factored in.  

Next week will be very quiet with no data released Monday followed by 2 bank holidays and finally some UK mortgage approvals and house price data on Thursday. With this in mind the rate will probably remain pretty flat and over the next fortnight most moves in GBP/EUR will be down to how investors view the current Eurozone crisis and more importantly how the ECB are managing it. 

At present they seem to be making all the right noises about keeping things under some form of control which has helped strengthen the Euro over recent weeks but not only do we normally see confidence erode eventually, it could be months or even years before we know the true scale of the crisis in Europe.

Sterling vs. US Dollar; 


Things tend to be quieter during the Christmas week due to the fact volumes are down with most traders enjoying their turkey sandwiches rather than worrying about ichimoku clouds and candlestick charts. 

The Dollar has weakened against Sterling in the last week giving a nice little gift for all those Brits jetting off to Aspen for a skiing holiday this festive period, mainly due to the impending fiscal cliff in the US. The uncertainty as to whether new fiscal policy will be put in place before 1st Jan to resolve the cliff will mean US politicians may not have as relaxing a Christmas as they are used to with this decision seemingly going to the wire. 

Sterling/Dollar rate has surged to the best in over a year, due to continuing uncertainty surround the U.S economy. If you are thinking of buying dollars in the coming months it may be a good idea to consider securing your rate of exchange before President Obama and White House representatives reach an agreement to avoid the looming Fiscal Cliff. 

As stated above, if an agreement can be reached before the 1st January 2013, we could start to see rates decline as investor confidence returns. 

You can either fix a ‘Spot rate’ which has to be settled within 2 working days, or if your requirement is some time away, you can still fix the current rates for up to 2 years into the future, and only lodge a small deposit to do so. 

Next week the back and forth between the democrat White House and the republicans in the house will dictate the course for the Dollar, but I suspect the biggest movement will be the following week when the timeline runs out on New Year’s Eve.

Economic Data that may affect exchange rates 

Monday – UK House prices is the only release of note. 

Tuesday – Bank Holiday 

Wednesday – UK/EU Bank Holiday. The only data release is US Mortgage data and Manufacturing numbers. 

Thursday – UK data is House prices and Mortgage approvals. In the EU we see French Consumer Confidence. US Data comprises of Home Sales & Jobless Claims. 

Friday – The only data today is French GDP, Spanish Retail Sales, and US Home Sales. 

Getting the best exchange rates 

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you. 

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day. 

Click here to send me a free enquiry

Pound/Euro rates continue to fall

Monday 17th December 2012

Good morning. As always for a Monday, today I'll take a look back at last weeks movements, and what may happen to exchange rates in the run up to Christmas. The Pound/Euro rate fell steadily last week, to it's lowest rate in nearly 7 months.

In this week’s Report: 

• UK’s AAA Credit Rating under threat 
• Pound/Euro rates continue to fall 
• Sterling Dollar remains near 2 month high 
• Round up of the week’s other data that may affect rates  

Sterling vs. Euro; 

Last week we saw sterling euro rates steadily decline on the back of several positive data releases from the Eurozone, coupled with negative data from the UK. In this week’s euro report we’ll look at what those releases mean and how they have affected the single currency and sterling. 

The main driving force behind the movements was due to a newly agreed plan to make the European Central Bank (ECB) the Chief Regulator of European banks. This in turn paves the way for direct recapitalisation of struggling Eurozone banks using funds from the €500 billion European Stability Mechanism (ESM). 

The news that the ECB will regulating struggling European banks coupled with the possibility that the UK could have its credit rating downgraded from its prestigious AAA all helped the single currency gain ground on a now floundering pound , making the 4 and a half year highs of 1.2860 seen only a few months back seem a distant memory. 

Rates are now at their lowest in quite some time, and give or take a point, you have to go back to May to see rates significantly lower. This is great news for anybody looking to sell Euros, however anyone with a requirement to buy Euros should consider their options now to protect themselves against further falls in the rate. 

The Christmas period is expected to be just as volatile as we expect more news from the EU summit that took place last week along with the typically reduced trading that happens at this time which makes the market more sensitive to any data releases. 

If you are buying/selling Euros what should you do?

If you have a euro purchase in the near future a forward contract enables you to fix a rate of exchange today for anything up too two years into the future and remove and risk from the market, protecting you from any volatility and giving you one less worry over Christmas. Alternatively if you think rates will recover, consider a Stop Loss order.  

A stop loss enables you to place a trigger at a pre-agreed level in the market to give you a ‘worse case’ scenario. In this way you can still hope rates recover, but have a 'safety net' should they fall. 

This is also perfect for any euro sellers at the moment, who may well be riding the rates in the right direction, however should the UK not find its credit rating downgraded we can expect to see it regain some of the ground it has lost to the single currency over recent weeks. 

Either way you look at the market it is a difficult time to gauge any future movements, reinforcing the importance if having a good currency broker on your side. 

Why not contact me for a free consultation? In this way we can discuss all the options available to you, so you can make an informed decision on when to fix your rate and what type of contract to take. 

Click here to send me a free enquiry now.

Weekly Economic Data that may affect exchange rates 

Monday – The only UK data of note today are the latest House Prices from Rightmove. IN the Eurozone, we have Trade Balance figures. In the USA there is a speech from the FED. 

Tuesday – Lots from the UK today including Consumer Price Index, Producer Price Index, Retail Price Index and a Bank of England Quarterly Bulletin. There is nothing of note from the Eurozone or USA today. 

Wednesday – Today we see the Bank of England minutes to the latest interest rate and QE decision. This could indicate future policy so will be closely watched by the markets. In the Eurozone we see Business Climate assessment from Germany, Industrial Orders from Italy, and EU wide construction output. In the States there are housing and Building numbers, and New Zealand releases its latest GDP numbers. 

Thursday – Retail Sales numbers from the UK today are a good barometer of overall economic activity. In the EU we have German inflation data, Italian Retail Sales and Trade Balance numbers. Over in the states we see GDP numbers, Inflation data, Home Sales and the latest manufacturing figures. 

 Friday – We end the week with a host of UK data: Consumer Confidence, GDP numbers, Public Sector borrowing and business investment figures. In the EU we will see German confidence and Import Prices, Italian Consumer Confidence, and a French Business Climate assessment. In the USA we have inflation data, Personal income numbers, and a consumer sentiment survey.  

Getting the best exchange rates 

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you. 

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day. 

 Click here to send me a free enquiry

GBP/EUR & GBP/USD forecast 2012/2013

Thursday 13th December 2012 

 Good afternoon everybody. In this afternoon’s post I’m going to take a detailed look at Pound/Euro rates, and the forecast for where rates may go in 2012 and 2013. I will also have a look Sterling/Dollar rates. 

I will also run over some of the options and contract types I can offer for any currency requirement you may have in the next 2 years, to help you get the best exchange rates and make the most of your currency. 

Pound/Euro stable in the mid €1.23’s 

 

The Sterling/Euro exchange rate has fallen slightly in recent weeks, but still remains firmly above the 1.20 mark. The reason for the fall is twofold, and will be familiar to regular readers as it’s been the main driver of exchange rates all year! 

Firstly we have the progress made in Europe, which the markets have taken to be positive. This has seen the Euro gain some strength and thus become more expensive to purchase. We also have the threat of the UK’s credit rating being downgraded, which has taken some steam out of the Pound. 

Some in the market are now saying that the euro could gain further support after the European Union agreed to make the European Central Bank the bloc's banking supervisor. This is positive news for the Eurozone, and so could pull rates down further. Of course things are so volatile in the Eurozone, it’s impossible to predict what will happen in the coming weeks. You can read about the new Bank rules here.

What UK news is affecting the Pound?

On the UK side, data has shown that British factory orders rose this month, although there was little reaction in the currency markets with the Pound remaining largely unaffected. Of more important to Sterling at the moment are growth prospects and credit ratings. 

In his recent autumn statement, George Osborne downgraded growth forecasts and said the country will miss debt-cutting goals. This has increased concerns the UK will lose its prized AAA credit rating. Only the UK and Germany retain good credit ratings from all major agencies. This could of course weigh on the Pound should we be downgraded. 

In my opinion however moves in the Pound/Euro rate will be driven more by developments in the euro zone in coming months rather than what will happen in the UK. Markets are waiting to see whether Spain will apply for aid, triggering the European Central Bank's bond-buying scheme that is seen as providing a backstop to peripheral debt markets. 

So which way will Pound/Euro rates go now?

In a nutshell, if things remain positive in Euros, GBP/EUR rates could fall. Should there be any unexpected deterioration of the situation in any of the troubled EU countries such as Spain, Italy, Portugal or Greece, then we could see renewed weakness in the Euro, causing rates to climb again. 

Regardless of whether you are buying or selling Euros, simply sitting back and hoping the market will move in your direction invariably means you are simply chasing the market using hope as your only economic tool. A wiser strategy would be to use tools such as Stop Loss and Limit orders, so you can take control of your requirement and allow you to budget effectively for any requirement you may have in the coming months.

If you would like a free consultation on the types of contract we offer such as Stop Limit orders, then get in touch with me today. I can discuss your requirements, let you know all your options and give you my view on the current market forecasts. In this way you can make an informed decision on what to do and when to buy your currency. Simply leaving things to chance could cost you dearly. 

Click here to send me a free enquiry, and book your free telephone consultation now. 

Pound Dollar remains near 6 week high vs. US Dollar 

 

The Pound has recently been at a 6 month high vs. the US Dollar, however fell a little today during trading. Sterling pulled back somewhat because investors took some profits after the news that the FED has announced a new round of monetary stimulus, which was expected. 

Moving Forwards, rates I think will now remain above the $1.60 mark against the Dollar for the rest of the year, especially if we see hints that the Bank of England wills hold off from signalling further Quantitative Easing in the UK. 

If you need to buy US Dollars at the best exchange rates, there are 2 things you should consider. Firstly, you can fix the rate now while it’s so good, using either a Spot of Forward contract. A spot contract needs to be settled in full within 2 working days of booking your rate. A Forward contract allows you to fix the current rate for up to 2 years, and only lodge 10% of the total to be converted. The remaining 90% becomes due when you want to have your US Dollars transferred. 

A second option is if you think the rate will rise further. You can place a ‘Stop Loss’ order at a level slightly below the current rate. This means if the market drops, your currency is secured at that rate, protecting you from a further decline, and giving you a worst case scenario. The advantage of a Stop Loss is that if the market continues to rise, you can continue to take advantage of any gains, raising your stop level in line with market movements. 

Click here to send me an enquiry to find out more about these types of contracts. 

Pound/Euro exchange rate forecast Outlook

Monday 10th December 2012

Good morning. Sterling Euro rates hit a 5 week low last week, before staging a slight recovery on Thursday and Friday. As always for a Monday, today I will take a look at what has moved the rates in the last week, and take a view on what the forecast for Pound/Euro exchange rates moving forwards. 

In today's report:

• Pound/Euro hits 5 week low before recovering on Friday
• Effect of budget statement on exchange rates
• Weakness after ECB speech pulls the rate higher again
• Round up of the week’s other data that may affect rates

Sterling vs. Euro; 

With last week’s Autumn Statement and data releases you would have expected substantial movement on both sides of the channel, and some significant movement for the GBP/EUR cross. Unsurprisingly with the ever so unpredictable currency markets the pair remained range bound with a 1 week movement within 0.65%. This week’s report will look at what has affected the rates and why Sterling seems to have put a stop to the recent decline in rates and strengthening Euro. 

 

So what happened with rates last week?

Markets opened at €1.2331 last Monday with a raft of data from the Euro zone, UK and States; Sterling was seen as the best performer as with a Purchasing Managers Index (PMI) of 49.1 (predicted 48.0). Across the Chanel, the Euro zone scored 46.2 with Greece coming bottom of the pile at 41.8. Albeit positive news for the UK sentiment it didn’t actually affect the rates much as the GBP/EUR cross seemed to be awaiting the Autumn Statement from George Osborne on Wednesday with Interest rate and GDP figures out on Thursday. 

What effect did the Autumn statement have?

The Autumn Statement was announced Wednesday with changes in Income Tax, Tax Relief, Capital Spending and Welfare; with the most worrying aspect being that debt reduction targets were behind schedule. This lack of progress could indicate towards a future downgrade of Britain’s AAA rating which would hinder the UK’s ability to borrow at current levels reducing the value of the pound. This could also mean further Quantitative Easing for the UK, putting Sterling at risk somewhat. 

Euro weakness pushes the rate higher again

There was however some good news for the Pound/Euro rate on Thursday as President Mario Draghi said “economic weakness will persist next year”. The European Central Bank (ECB) cut its growth forecasts and the Euro weakened as the mid-market moved up 0.5% within the space of an hour; further weakness continued through Friday as the Bundesbank slashed the 2013 German Growth Forecast from 1.6% to 0.4%. The Frankfurt based central bank did say it would recover to 1.9% in 2014. 

So from the 5 week low for the GBP/EUR cross, rates could come back up due to the weakness in the Euro zone. Alternatively, we could also see further Quantitative Easing (QE) out of the UK as debt reduction targets are behind schedule, and more stimulus might be required to help and bolster growth in the UK, potentially weakening Sterling. So the tug of war between Sterling and Euro continues, with no clear consensus on which direction things will go in the coming weeks and months. 

So what does this mean if you are looking to fix a rate or make the most out of your funds? 

If you are looking to purchase Euro’s at the moment, yes the rates have come down from the August High of €1.2878, but we're still looking pretty good at the €1.24 level. If you need to buy Euros, it's important to remember that at the end of last year you would have seen the mid-market nearer to €1.13. 

A typical purchase of €200,000 would now cost you over £15,000 less! Certainly if I needed Euros, I'd be happy to trade above €1.24 and would not want to risk losing out more should the UK have it's credit rating downgraded.

If you are looking to sell Euro’s and you are wary of the problems in the Euro zone or you are in the process of signing for a property a Forward Contract is a great tool for securing your price ready for completion. 

A Forward Contract takes the volatility out of the market and means you know exactly where you stand once you have completed either selling or buying a property abroad. 

Another option for Euro sellers is a Stop Loss order. This allows you to continue taking any gains, but should the market move against you, you can place an order to trade at a certain level, limiting any potential loss should the market go against you. 

To find out how Forward contracts operate, along with all the market contracts available to you hy not send me a free enquiry now. I can provide a free consultation on all the options available to you. 

Click here to send a free enquiry now.

Weekly Economic Data that may affect exchange rates 

Monday – There is no UK data of note today. There is however a raft of data from the Eurozone including German Trade Balance and wholesale prices, Italian Industrial Output and GDP figures, Greek inflation data and Industrial production, in addition to an EU wide investor confidence Survey. 

Tuesday – Today we have UK House Price Balance from RICS. There is also a bond auction in the UK. In the Eurozone we have the German & EU wide ZEW survey on economic sentiment. Over in the United States we see Trade Balance numbers and wholesale inventories. Further afield, Australia has a consumer confidence survey. 

Wednesday – It’s all about unemployment in the UK today, as we will see the claimant count, unemployment levels and average earnings data. Later in the morning we have a speech by one of the BoE’s MPC members, so this could cause volatility for Sterling. In the Eurozone inflation is the order of the day, with the latest numbers from Germany and France. Over in the USA we will see Imports and Exports, an interest rate decision from the FED, the latest FOMC economic predictions and a budget statement. 

Thursday – Unusually quiet in the UK for a Thursday, with only a CBI industrial trends survey. In the Eurozone we will see inflation data for Spain and Italy, and also Greek unemployment and the ECB monthly report. There is also a European Council meeting which will discuss the debt crisis. In the states we have inflation, Retail Sales & Business inventories. 

Friday – We end the week with Services & Manufacturing PMI from Germany France and the whole EU. Over in the US we have a raft of inflation data in addition to Industrial production. There is nothing of note from the UK.  

Getting the best exchange rates 

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you. 

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

Click here to send me a free enquiry

Autumn statement effect on exchange rates

Wednesday 5th December 2012 

Good afternoon. The market has now stabilised after the Autumn statement by the chancellor. In this afternoons post I’m going to have a quick look at the effect of the statement, and also what is coming up in the next few days that could affect exchange rates. 

Effect of Autumn budget statement on exchange rates 

This is an easy one to sum up; there was little to no reaction at all! Sterling had been falling in the run up to the announcements anyway, and this morning was at a 1 month low against the Euro. As is often the case, the currency markets move more on rumour than actual fact, and the Pound was already vulnerable as investors braced for grim tidings from the UK's finance minister in his half-yearly budget statement. This is how GBP/EUR has moved today:

The market has already been anticipating a difficult Autumn Statement and this was for the most part already priced in to rates. Earlier this morning, the pound barely reacted to a survey showing Britain's service sector grew at its slowest pace in almost 2 years. The PMI number was below forecasts, but still just above the magic 50 level, which signals growth, which is probably the reason we saw hardly any movement. 

You can see in the chart above the market was already at its lowest before the speech, and the Pound/Euro rate actually recovered by around 0.3% just before Mr Osborne starting speaking. During the speech we saw basically no movement at all, as there were no surprise announcements. 

You can read a quick guide here as to what the statement contained from the BBC. The only real thing of interest was the scrapping of a planned 3p rise in fuel duty. Also of interest to the currency markets were the growth forecasts which are now predicted to be -0.1% in 2012, down from 0.8% predicted in the Budget. Forecasts for next few years are: 1.2% in 2013, 2% in 2014, 2.3% 2015, 2.7% in 2016 and 2.8% in 2017.

Quantitative Easing announcement tomorrow

Lowered growth forecasts could open the way to more quantitative easing by the Bank of England QE is generally perceived as negative for a currency. But if the fiscal austerity programme is relaxed too much that could also be negative as it would bring the UK's triple-A rating into question. 

The next announcement on QE is tomorrow lunchtime, when the Bank of England will announce whether or not they will increase the measures. We will also see the Bank of England and European Central Bank announce their latest decisions on interest rates. 

I don’t’ expect any surprises on either QE or interest rates. In the run up to Christmas it’s highly unlikely that there will be any changes, but depending on how economic figures are in the next few weeks, we may see more QE in the early part of next year.

• Do you need to buy or sell Euros? 
• Are you looking for the best exchange rates? 
• Would you like to discuss the markets to find out what is happening to help you decide when to fix your rate? 
• Fed up with poor rates and high fees from your bank or existing broker? 

Click here to send me a free enquiry. I can discuss your requirements and explain the mechanics of how our service works. Remember our rates are up to 5% better than available elsewhere, so the savings can be significant. 

When you get in touch, remember to ask for Alastair Archbold and quote BLOG.  

Click here to send me a free enquiry

Pound/Euro exchange rate forecast December

Monday 3rd December 2012
Good morning everybody. It's a new month, and today I'll take my usual retrospective look at what happened last week, why the Pound/Euro rate fell, and what the month of December may hold in store for Exchange Rate forecasts for the best Pound/Euro exchange rates.

In this week’s Report: 

• Pound/Euro rates fall on Bailout news 
• New Governor for the Bank of England 
• Round up of the week’s other data that may affect rates 

Sterling vs. Euro; 

Pound/Euro rates dropped to a 5 week low on Friday last week, as the Euro gained further strength due to the fact progress has been made with bailouts for troubled EU countries such as Greece and Spain. The main cause for the strength was the approval of Greece’s next bailout payment, which was uncertain in the early part of last week. As you can see from the chart below, rates have been in decline for some time, which will cause concern for anybody needing to purchase Euros. 

 
Why has the Euro strengthened? 

The strength came as the German parliament has approved a Eurozone bailout payment of 44bn euros (£32bn; $51bn) for Greece by a large majority despite unease about the cost. Before Friday's vote, Finance Minister Wolfgang Schaeuble warned German MPs that the fate of the Eurozone was at stake in Greece, which has had two huge international bailouts in recent years. "A Greek bankruptcy could lead to the break-up of the single currency area," he said. 

Despite the fact that Greece's government had carried out reforms and passed a harsh austerity budget, the release of the next round of money was delayed for weeks by a disagreement between its lenders - the International Monetary Fund (IMF) and European Central Bank (ECB). The European Commission has set out a timetable for integration, including plans for a separate budget and joint issuance of debt. 

In the short term the commission's chief, Jose Manuel Barroso, envisages a new fund inside the EU budget to speed up structural reforms. The instrument - essentially a fund for struggling economies in the 17-nation currency bloc - would require governments to sign "contracts" similar to the strict conditions demanded for bailouts. Mr Barroso said: "We need a deep and genuine Economic and Monetary Union in order to overcome the crisis of confidence that is hurting our economies and our citizens' livelihoods." 

The news was welcomed by the markets, and the Euro gained strength as a result, causing it to become more expensive and pushing GBP/EUR rates lower. 

New BoE Governor announced, what could this mean for Sterling? 

In other news last week, the appointment of Mark Carney as the new Bank of England governor has been generally welcomed. However, with an expanded brief which includes overseeing the health of the country's banks, it will be a tough job. 

The first foreigner to be appointed Governor of the Bank of England in its 318-year history said he was “going to where the challenges are greatest”. He is currently the governor of the Bank of Canada, and will replace Sir Mervyn King next summer after the Chancellor decided against another British candidate for the role. 

Mr. Carney, 47, who had previously ruled himself out of the running for the governorship, is credited with helping to protect Canada from the global economic crisis. It is one of the few countries to have recovered fully from the financial meltdown. His appointment came as a surprise to City experts who had predicted that Paul Tucker, the deputy governor, would be promoted. 

What this means for the Pound is uncertain. Some say he is more of a ‘hawk’ than outgoing governor Mervyn King, who for some time has been talking the Pound down. However the challenges that Canada faced are very different to ours, mainly as the fact they avoided recession was due to the fact they are a commodities based currency. We will have to wait and see what his approach means, but in general the news has been welcomed by the markets. 

Summary for Pound/Euro rates 

We have seen rates fall for several weeks now, due to renewed strength in the Euro. Despite UK growth forecasts being revised up, Sterling is failing to make any gains against the Euro. Given there have been warnings the UK may head back to recession, there is every chance rates could continue to drop away, however if we get better growth figures this week, the Pound could make a recovery. 

Regardless whether you need to buy or sell Euros, contact us today to discuss the different options you have available to you. It’s free to have a consultation, and in this way you can find out how to protect against the rate moving against you, and make sure you are making the most of your currency. 

Click here to send me a free enquiry. 

Weekly Economic Data that may affect exchange rates 

Monday – It’s the start of a new month, and the first data release of note is UK House prices from the Halifax. We will also see some UK inflation data this morning. In the Eurozone we have various inflation numbers which could dictate future interest rate movements. Elsewhere we have US Construction Spending, Vehicle Sales, Inflation data and a speech from the FED. 

Tuesday – Today’s UK data comprises Retail Sales numbers and Construction figures. The EU wide inflation figures at 10am could affect GBP/EUR prices. From Canada we have an interest rate decision. 

Wednesday – We kick off with Australian GDP figures. Later in the morning we have another host of inflation numbers from the Eurozone, in addition to Retail Sales. The UK also releases some inflation figures. Over in the USA we have Mortgage applications, Employment numbers, Factory Orders and Inflation Data. 

Thursday – An important day for the UK today. At 09:30am we have Trade balance figures. Later in the morning we have the latest decision on Interest Rates and Quantitative Easing. Both of these have been key to Sterling’s weakness recently. EU data today comprises of French Unemployment numbers, EU wide GDP figures and the latest interest rate decision from the European Central Bank. There are some Jobless numbers from the USA at 13:30pm and in the evening New Zealand announces its interest rate decision. 

Friday – We end the week with UK House Prices, Industrial & Manufacturing Production and the latest inflation numbers. There is also a GDP estimate in the afternoon that could affect the value of the Pound. In the EU we will see French Trade Balance data and German Industrial Production. Stateside we have Earnings data, Unemployment, Non-Farm Payrolls and a Consumer Sentiment Survey.  

Getting the best exchange rates 

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you. 

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day. 

Click here to send me a free enquiry

Pound/Euro forecast; rates could drop further

Monday 26th November 2012

Good morning. The Pound/Euro exchange rate fell quite a bit last week, and the forecast is for this to continue. This is partly due to events in Europe, but also due to the fact the Bank of England governor is speaking again this week, and could well talk the Pound down further. So what have I got for you in today's post?

 

In this week’s Report: 

• Pound/Euro rates in decline last week
• Bank of England speech this week could weaken Pound further 
• EU fails to resolve Greek/EU debt issues 
• Round up of the week’s other data that may affect rates

Sterling vs. Euro; 

Pound/Euro rates last week were largely dominated by discussions between the IMF and EU Finance Ministers, over a €44 billion Greek bailout. The single currency strengthened considerably, due to the optimism of the aforementioned plan, but was clouded mid-week by continued disagreements between the two deciding factions. As you can see by the chart below, rates have been in decline now for a few weeks. 

Reports on Monday last week outlined that an agreement was expected the following day that would allow Greece to access the bailout monies allocated from December 5th. However, following a twelve hour meeting no solution to Greece’s debt problems could be met, prompting Christine Lagarde to say that the meeting had yielded progress but the technical details could not be ironed out. 

The euro, which had been steadily strengthening due to the meeting’s publicity, retraced part of its gains as speculators were reminded that solving the region’s debt-crisis cannot be done by simply releasing bailout funds. 

What caused the Greek debt crisis?

 

The Greek crisis emanated from enormous borrowing which grew exponentially since joining the euro. Public spending soared after adopting the single currency; costs which were not offset through taxation, largely due to widespread tax evasion, making it impossible to balance the books. When the Global Financial Crisis occurred it wiped the foundations from Greece’s house of cards, and essentially made it impossible to repay their lenders due to the staggering debt-levels they had accumulated. 

The high emphasis on a Greek rescue stems from a fear of contagion. Contagion is the notion that if Greece were to default on their debts, a similar cycle of events could affect countries like Spain, Italy and Portugal. The cause is a result of the fear that these countries could follow Greece’s example and default on their obligations. 

Not only this, but the losses associated with a Greek default would significantly dampen Global liquidity; in a nutshell, when people are fearful and refuse to spend, economies become stagnant. Talks are on-going which for the GBP/EUR rate means that an agreement could see the rate drop further as the euro strengthens. However if there are more delays or compromise can be met, this could see the rate bounce back as the single currency will weaken. So things really could go both ways in the coming weeks. 

Mervyn King could talk the Pound even lower

One argument for rates dropping further, is a continuing weakness in Sterling. The Governor of the Bank of England is speaking on Thursday and is largely expected to pour cold water on Britain’s economic progress, as he did a few weeks ago. Many believe that this is an attempt to weaken the pound as a ploy to increase our competitiveness in the export market; as the EU is major trade partner. This comes despite some positive data from the UK which saw momentary retracements on the euro’s strength last week. 

How to protect against the rate dropping

If the euro is your currency of interest, send me a free enquiry and I can get in touch to discuss your options. If the Market appears to be moving against you, Forward Contracts and Stop Orders are great ways of protecting yourself from adverse Market movements. If the rates are going in your favour, Limit Orders allow you to set an optimistic level in the Market which can be automatically purchased, 24 hours a day, seven days a week. 

Send an enquiry now to find out how we can help you.

Weekly Economic Data that may affect exchange rates 

Monday – The main data that could affect GBP/EUR rates today is from Germany. We have a host of data from Europe’s largest economy, including Retail Sales, Import Prices and a Consumer Confidence Survey. Staying in Europe, we also have the EcoFin meeting, which covers areas such as coordinated economic measures, budgetary policies, public finances, capital movements and financial markets. Elsewhere we have Trade Balance figures from New Zealand, and manufacturing data from the USA. 

Tuesday – An important day for the Pound, as we will have GDP figures, House Prices and Business Investment measures. There is nothing major from Europe, but across the pond we’ll see US House Prices, Consumer Confidence, and Speeches by various members of the Federal Reserve. 

Wednesday – Nothing from the UK today. We do have some German inflation figures along with Spanish Retail Sales. IN the USA we will see some further Home Sales data, which is a good barometer of overall economic health. 

Thursday – A fairly busy day today. Starting in the UK we have Consumer Credit, Mortgage Approvals, and a Speech by the Bank of England governor Mervyn King. Be very mindful of this, as last time he spoke he talked the Pound down by a significant amount. It’s followed by a UK Financial Stability report. In Europe we will see Consumer Confidence, Economic Confidence, Industrial confidence along with German unemployment numbers. In the states we have Jobless Claims, Homes Sales and manufacturing numbers. 

Friday – The only UK data of note is consumer confidence and an inflation report. In the Eurozone we have Inflation numbers, unemployment numbers and Retail Sales. We end the week in the Americas with inflation numbers from the USA and GDP figures from Canada.  

Getting the best exchange rates 

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you. 

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day. 

 Click here to send me a free enquiry

Pound/Euro rates falling. December forecast

Wednesday 21st November 2012 

Good morning. In today’s post I’m going to look at the developments so far this week that have affected exchange rates, including the Bank of England minutes, UK public sector borrowing, The latest on the Greek bailout, and the downgrading of Frances Credit rating. Of course I will also take a view on how this could affect exchange rates in the coming weeks and months. Let’s start in the UK. 

Bank of England minutes 

This morning the Bank of England released the minutes from the latest decision to hold off any more Quantitative Easing (QE) and leave interest rates on hold.

There were no real surprises; only one member voted for QE, so the vote was split 8-1. 

This indicates there is less chance of further stimulus in December, however many think it’s only a matter of time before more funds are needed, so I think depending on economic figures, we could see further QE in January. If so, then expect the Pound to weaken if it starts to look more likely stimulus will be needed. The decision to leave interest rates at 0.5% was unanimous. 

Public Sector borrowing increases 

The Pound hasn’t fared very well this morning though, falling half a point so far from the open this morning. One reason is the news that the government borrowed much more than expected in October, reducing the chances that the UK will hit its deficit reduction target in 2012-13. 

UK public sector net borrowing hit £8.6bn in October, which is a blow to the government as they were hoping that the deficit would fall by around 5%. At the moment this is moving in the wrong direction, and this is causing the Pound to lose out to other currencies, pulling exchange rates down. 

No Greek deal – what does this mean for Euro? 

Over in the Eurozone, the main concern continues to be Greece. They have failed to reach a deal to give Greece its latest bailout payment, and this threatens the whole bloc, leaders have said. Following nearly 12 hours of talks in Brussels, the Eurogroup said it needed more time for technical work. Greece needs the next tranche of its second bailout worth 130bn euros ($166bn; £104bn) to avoid insolvency. 

The Eurozone "would be threatened if we did not reach" a deal, French Finance Minister Pierre Moscovici said, before adding that "we are very close to a deal." The news initially caused some weakness in the Euro, pushing exchange rates up slightly. 

These gains were short lived however, and rates have already dropped below the level we have been sat at for most of the week. The reason that a weak Euro is not really pushing up GBP/EUR rates is the fact that problems in the EU have a knock on effect on the UK, so even if more problems arise, don’t expect Pound/Euro rates to shoot up. 

French credit rating downgraded 

In a further blow to the EU, Moody's downgraded France's debt from Aaa to Aa1, and kept its negative outlook, meaning it could be cut again. Moody's blamed stalled economic growth, the risk of a Greek euro exit and the risk that France has to contribute to bailing out other Eurozone countries. This leaves only Germany and the UK with AAA credit ratings from all agencies, reflecting the health of the 2 large economies. 

So what does all this mean for exchange rates? 

Surprisingly it hasn’t really affected rates that much. Pound/Euro rates have been range-bound around the 1.24 to 1.2450 level for a while now, and the markets are not reacting too much to the latest news. The main driver continues to be investor confidence, and at the moment the UK is not performing too badly. 

What is a concern is the Bank of England’s determination to weaken the Pound to try to help our exports. Also, problems in the EU will affect the Pound, as I’ve already talked about in detail over the last week or two. 

If you need to buy Euros, consider a Forward contract 

I think it’s unlikely we will see any gains in the GBP/EUR rate any time soon, so if you need to buy Euros then consider a Forward contract. This is where you can fix today’s rates for up to 2 years, and only pay 10% of the Sterling now. The remainder would be due when you want to take delivery of your currency. 

In this way you can protect against adverse exchange rate movements and budget effectively for any purchase either soon or in the future.

Click here to send me a free enquiry now, and find out more about our commercial exchange rates.  

Getting the best exchange rates 

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you. 

It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.  

Click here to send me a free enquiry

Pound/Euro exchange rate forecast outlook

Monday 19th November 2012
Good morning. Another Monday morning, so let's take a retrospective look at what happened with exchange rates this week. In today's post I'll also look at some of the tools you can use to protect against exchange rates moving against you.

In this week’s Report: 

• Bank of England warns of triple dip recession
• Greek bailout casts shadow over Eurozone 
• US Dollar strengthens 
• Round up of the week’s other data that may affect rates 

Sterling vs. Euro; 

After a crazy week on Sterling/Euro last week, many people will be looking at this week a little unsure as to how their own requirements will play out. Many thought sterling would start to stretch its legs against the single currency as it started the week by pushing up to a 6 week high on the cross by Tuesday. 

This bullish run for the pound was, as often is these days, more of a dash than a marathon as BoE Governor Mervyn King poured his customary glass of icy water over the hopes of strong UK economic growth. By predicting that growth will follow a long and winding road, and saying there could be scope for further QE as it is only assessed every month and not forecasted; King and his MPC colleagues moved the market down over a point in a single trading session on Wednesday after their inflation report. 

It should come as no surprise that the pound fell on the back of Kings’ speech, as it is certainly not the first time. It is also no coincidence either; throughout the financial crisis a tenet of BoE policy has been to keep the pound weak to aid UK exports to both boost economic growth and support the UK’s payments deficit. We will find out even more detail from the central bank when they release their minutes of the last meeting, on Wednesday.

The effect of the Eurozone crisis on Pound/Euro rates

What Mervyn King cannot control however, is the performance of the much maligned Euro zone economy. Figures at the end of last week showed that the 17 nation currency area returned to recession and gave the weekly graph a kick in its tail with the rate forced up on Friday, just not quite as high as it got to on Tuesday. 

One of the reasons the rate did not drive further and may not do so is the closeness and interdependent nature of the UK and Euro zone economies. Although the Euro zone appears to be teetering on the edge of disaster and the UK has posted good growth for the last quarter, the short-term forecasts still do not expect a sustained sterling rally. 

Every bail out of sovereign states strengthens the Euro as investors take it as a signal of solidity in the euro zone and the threat of a Spanish bailout, an economy which dwarfs Greece’s, would potentially see a large swing in the Euros favour. 

How to protect against rates moving against you

So going forward, if you are looking to buy Euros you should consider placing a Stop Loss order.This is where you can instruct us to purchase your currency should it drop below a pre-agreed level. 

For example, if you have set your budget at 1.22 you can then take a bit of a gamble on rates getting better, but have a safety net in place should rates fall. This is a good way to approach the current market, as it means you don’t lose out on all the recent gains and can still trade at a reasonable level. 

Click here to find our more about our rates and service.

Weekly Economic Data that may affect exchange rates 

Monday – Rightmove releases the latest UK House Prices this morning showing how that sector is performing. Eurozone data includes Italian Industrial Sales & EU wide construction output. We may also see news on Greeks latest bailout. Over in the United States we have House prices. 

Tuesday – There are no UK releases today. In the EU we have German inflation data and the EcoFin meeting. Further afield we have the latest minutes from the Reserve Bank of Australia. 

Wednesday – Quite an important day for the UK as we have the BoE minutes from the latest MPC meeting, which will show the discussions regarding Quantitative Easing. There are no EU releases of note. USA data today comprises of Jobless Claims, Mortgage Applications and a Consumer Sentiment survey. 

Thursday – Fairly quiet in the UK today with only a minor industrial trends survey being release. There is a host of inflation numbers from across Europe that could affect GBP/EUR rates however. There is also an EU consumer confidence survey. 

Friday – Mortgage approvals is the only notable release from the UK this morning. In the EU we have German GDP figures and a European Council meeting. There is nothing of note from the US.  

Getting the best exchange rates 

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you. 

 It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

 Click here to send me a free enquiry

Pound/Euro rates fall on BoE Inflation report. Forecast.

Wednesday 14th November 2012 

Good afternoon everybody. It’s been quite a mixed week so far in the currency markets, with big swings in the Pound/Euro rate along with other currencies. As the week started, Sterling was at a 6 week high against the Euro, and things were looking very good for Euro buyers. As is often the case with sharp upward spikes however, it was not to last. By Wednesday, a dire report from the Bank of England took the wind out of the Pounds sails, and we saw GBP/EUR rates drop by over a point.

In today’s report I’m going to take a look at what caused the Pound to fall, and what the events in the EU may mean for rates going forward.

Sterling/Euro highs were not to last 

Sterling hit its best rates against the Euro in 6 weeks recently after the Bank of England left interest rates and the size of its bond-buying programme unchanged, as outlined in my last post. The decision had been broadly expected by most analysts after a great run of UK data.

However the gains were not to last, firstly due to a dire report from the Bank of England this morning, and fears over what effect the deepening EU crisis will have on the Pound. Let’s take a look at what the Bank of England governor said and what effect it had on Sterling.

Pound falls after BoE Inflation report 

This morning, Sir Mervyn King gave the latest Bank of England inflation report, and during this he has downgraded the growth forecast and warned the economy will be below pre-financial crisis levels for the next three years as it continues its recent "zig-zag'' pattern. The comments did not bode well for Sterling.

Often when Mervyn gives a speech he talks the Pound down, and today was no exception. He said that the Pound/Dollar rate had gained by 8% and the Pound/Euro rate by 12% in recent times, and that these gains were unsustainable. I think he is worried what effect the strong Pound will have on exports, and so purposefully caused some weakness to try and drive the economy.

In the report he said that the Bank of England expects GDP growth of just 1% in 2013, and also said that inflation would to fall back towards the Government's target of 2% in the latter part of next year.

“There seems a greater risk that the UK economy may be in a period of persistent low growth,” Sir Mervyn said. He added that the outlook for inflation was the main reason why the policymakers decided to stop the purchases of gilts - or quantitative easing - in November. There is a real chance more QE could be on the cards however in December or early next year, so those that need to buy Euros should seriously consider their position now.

EU fears could also affect Pound/Euro rates

Little sign of a recovery in the euro zone any time soon is likely to weigh on the single currency against sterling. Weakness across the board would normally cause GBP/EUR rates to rise, however there are real concerns about whether the UK's economic recovery can be sustained, given a deepening recession in the euro zone which is one of our key trading partner.

If the EU economy continues to struggle, then it’s going to affect the Pound and this could keep rates in check.

The Greek economy is doing very poorly. It shrank 7.2% in the third quarter compared with the same period a year earlier, and has now been in recession since late 2008. They’ve had 2 bailouts from the EU and IMF, and there will probably be more to come.

Eurozone finance ministers will meet next week to discuss releasing the latest 31.5bn euros as they seek agreement on how to make Greece's debt sustainable going into the next decade. In the shadow of all of this, workers across the European Union are staging a series of protests and strikes against rising unemployment and austerity measures. General strikes in Spain and Portugal have halted transport, businesses and schools, and led to clashes between police and protesters in Madrid. Smaller strikes were reported in Greece, Italy and Belgium, and rallies were planned in other countries.

Summary 

Many clients are convinced that the problems in EU will drive rates back towards the 4 years highs of €1.28 we saw in the summer. I don’t agree with this. These were the highest rates for years, and despite much better expected UK data we have failed to get back to them.

Rates have fallen further this week due to fears over the UK economy, so if I needed to buy Euros I would give serious consideration over what to do now. We are still trading comfortably above the 1.20 level, and this time last year rates were as low as 1.13. Holding out for more gains could easily mean you lose out.

A wise strategy in this climate would be to place a Stop Loss order. This is where you can instruct me to purchase your currency should it drop below a pre agreed level. For example, 1.22. You can then take a bit of a gamble on rates recovering, but have a safety net in place should rates fall. This is a good way to approach the current market, as it means you don’t lose out on all the recent gains and can still trade at a reasonable level.

If you're looking for the best exchange rates, or just want to have a chat about the options open to you, then send me a free enquiry by clicking below. There is no cost or obligation involved, and you could be very surprised on how much you can save through the commercial rates I can source for my clients.  
 
Click here to send me a free enquiry