Pound/Euro gains February 2012 Forecast Predictions

Wednesday 1st February 2012
Good morning. The Pound surged through trading yesterday afternoon, rising to a 2.5 month high against the US Dollar, and rising close to an 18 month high above €1.20 against the Euro. This was all due to hopes that Greece will reach a deal with its private creditors this week. The Below charts show how rates moved throughout the day yesterday

~Currency Movements on Monday 30th January 2012~

Pound makes significant gains against Euro

As the charts above clearly illustrate, Sterling had a great run agains the Euro yesterday, gaining by over 1%. Look at it go! It was due to hopes a deal to help Greece is imminent. Greek Prime Minister Lucas Papademos said negotiators had made significant progress in debt restructuring talks, sparking optimism the country may avoid a chaotic default.

This buoyed sentiment towards the euro and lifted riskier assets and currencies, including sterling. As a result, the Pound gained against both the Euro and US Dollar. This is because the Pound is seen as a risky asset, so the increased confidence strengthened the Pound. However, despite the gains, there is much in the next week or two that could reverse Sterling's fortunes.

Analysts still predicting Sterling will fall

Despite the jumps in the GBP/EUR and GBP/USD exchange rates, the Pound could come under pressure later this week, with purchasing managers' surveys on manufacturing, construction and services likely to give further evidence of the fragility of the UK economy.

Indeed, data yesterday highlighted the sharp declines in money supply and consumer credit, however the negative data had little effect on sterling. It does however increase the chance of further Quantitative Easing next week at the BoE's meeting on Thursday. Many in the market expect the Bank of England will announce another round of quantitative easing under its asset purchasing programme in February in an attempt to boost the economy.

The last time QE was announced Sterling fell across the board. It's difficult to forecast what effect it may have however. As it is being widely predicted, it will be partly priced in to the market rates already, however I expect further drops for the Pound should the BoE indeed go ahead with further QE.

What you should do if you need best Euro exchange rates

With the mid market rate again over the €1.20 mark, it represents the best buying levels for close to 18 months. With the risk of QE pulling the Pound back down, there are a few options you have if you need to buy Euros in the next 6 months.

You could fix the rate now on a Forward contract, so you lock in today's rates for up to 2 years and are protected against a fall in rates. You would need to lodge 10% of the total you want to convert as a deposit, with the remaining 90% due when you want the Euros transferrred. While protecting against downward movements in the rate, it does not allow you to take adcantage of any subsequent gains.

If you wanted to gamble on rates getting even higher, consider a Stop Loss. This is where you place an order for me to buy currency should it fall below a pre agreed level. In this way you can aim for higher, but have a worst case scenario should rates fall.

It should be noted that this is the 5th time rates have broken €1.20 in the last few years, and each and every time the spike is short lived, to be followed by a correction lower. If it were me needing Euros in the next 6 months, I would fix the rate as soon as possible, considering back in October it was €1.13.

If you need to buy Euros and want the best exchange rates, contact me now.

Today's Data

We’ll start down under today – Australia has Building permits, Commodity prices and Trade Balance figures – if good this could push GBP/AUD even lower than it already is. The UK releases its PPI data this morning also.

In the Eurozone there are also inflation figures. In the USA there are some important releases – Jobless Claims, Labour costs and Nonfarm productivity.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Greek debt worries weaken Euro. Again.

Tuesday 31st January 2012
Good morning. There were no UK data releases of note yesterday, so yet again exchange rates were driven by events in the Eurozone. Sterling gained against a broadly weaker euro ahead of an EU summit in Brussels, with investors cautious as talks continued between Greece and private creditors on a debt swap deal. This pushed GBP/EUR rates higher, but not by much and rates remain under €1.20. Against the US Dollar, the Pound fell slightly as the weaker Euro drove investment to the safe haven US Dollar.

~Currency Movements on Monday 30th January 2012~











Pound gains vs Weaker Euro

European Union leaders yesterday had a meeting to discuss a deal introducing a permanent bailout fund for the euro zone, the European Stability Mechanism (ESM), and finalise a fiscal compact that will introduce a balanced budget rule in national legislation.

However, this was overshadowed by negotiations on a debt swap deal in Greece, which has weakened the Euro slightly and pushed GBP/EUR rates higher. Greece must reach a deal with its creditors to receive a second rescue package and avoid a disorderly default.

In the absence of any significant UK economic data releases, this drove the market yesterday.

Pound gains against US Dollar

As regular readers will be all too aware by now, when there are times of economic uncertainty such as those currently faced by the Eurozone, the US Dollar tends to gain strength due to it's safe haven status. Indeed this is what we saw yesterday, with the Pound losing ground against the Greenback, however we are only just below the recent 5 week high, and significantly above the recent 18 month low.

Today sees inflation data and consumer confidence measures for the states. Neither of these are likely to be very positive, so this could stop the Dollar gaining significant strength.

Pound to weaken as we get closer to QE?

Many market analysts, me included, expect the Bank of England will increase asset purchases under its quantitative easing programme in February. That is likely to weigh on sterling, although comments by BoE policymaker David Miles on Friday dampened the prospect.

Data releases this week for the UK will be watched very closely, as it is these that will influence whether the BoE indeed decide to opt for further stimulus next week.

Today's Data

Starting in the UK we have Consumer Credit, Mortgage Approvals and Net Lending. Of more importance will be the EU unemployment figures released at 10am. In the afternoon we see Canadian GDP and Industrial Prices, and in the USA we see inflation data and a measure of consumer confidence.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Weekly GBP/EUR & GBP/USD and the weeks data

Monday 30th January 2012
Good morning. Another Monday, so let's start the week with a full breakdown of the last weeks movements in the currency markets.

In this week’s Report:

• Pound/Euro hits 4 week low
• Sterling/Dollar rises to 5 week high
• UK headed back to recession, more QE on the way
• Round up of the week’s data that may affect rates

(For currencies other than GBP, EUR and USD, contact us for a consultation)

Sterling vs. Euro;

Last week saw the volatility continue in the currency markets as Sterling dropped to a 4 week low against the Euro. With the UK economy shrinking by 0.2% in the last quarter of 2011 and poor UK retail data being released, Sterling fell away from the €1.20 highs we have seen over the last few weeks. One of the only positives for the UK was the news from the BoE (Bank of England) that all 9 members had voted against more QE which lent some valuable to support to the pound. There were also some positive sounds coming from Greece as leaders met Private Creditors to look at reducing Greece’s rising debt levels.













Official Figures released last week showed that the UK economic activity shrank by 0.2% in the last three months of 2011 compared to the 0.6% increase we saw at the end of the third quarter. Chancellor, George Osborne, said the figures were disappointing but not a surprise. "They are not entirely unexpected because of what's happening in the world and what's happening in the Eurozone crisis," he said. "The truth is that dealing with those problems is made more difficult by the situation in the Eurozone."

Retail sales fell in January as shoppers reined in their spending at the start of the year, the CBI says. Its monthly survey found 44% of retailers said sales volumes were down on a year ago. Ian McCafferty, the CBI's chief economic adviser, said: "Shoppers have reined in spending across the board at the start of the New Year after taking advantage of early discounting last month, which boosted pre-Christmas sales.” He added that poor sales were likely to lead to further falls in the rate of inflation.

Key talks between Athens and its private creditors took place last week as they try to agree a debt write-off that would dramatically reduce Greece's debt levels. If an agreement can be reached, Greece is in line to receive 130bn euros in additional bailout funds. Without the latest bailout package Greece would struggle to repay 14.5bn euros of loan repayments that are due in March. The agreement would see Greece's debts dramatically reduced by half to its private creditors.

With the GBP/EUR rate falling this week we have seen a rise in the number of stop losses placed with our brokers and banks. This is where clients look to protect themselves against any adverse exchange rate movements. E.g. you can place a Stop Loss order to buy your Euros should they drop below a pre agreed level - for example €1.15. In this way you can continue to take advantage of gains in the rate, but have a ‘worst case scenario’ should the market move against you. To put this into prospective if you did not have a stop lose in place and the rate dropped to where it was just a few months ago, purchasing €200,000 would cost you nearly £10,000 more.

Send me a free enquiry now to find out how much we can save you.

Sterling vs. US Dollar;

Last week saw a complete reversal in Cable’s fortunes after GBPUSD rates went from an 18 month low to a 5 week high. The Pound began gaining against the Dollar as talks of a Greek bailout package put pressure on the Greenback as risk appetite increased, although any gains made were moderated by concerns over another round of Quantitative Easing in the UK. It’s expected that the Bank of England will announce that it will buy billions of Pounds worth of gilts as early as next month.













"Sterling/dollar has been weak in the last month, primarily because of the weakness of the euro but also because of evidence of renewed UK economic weakness," analysts at Lloyds said, adding that the run-up to any announcement of further QE was typically negative for the pound.

Sterling briefly suffered losses against the Dollar midweek as data released showed Britain’s economy contracted in the fourth quarter, shrinking by 0.2%, below the consensus forecast of a 0.1% contraction. Growth for the whole year was just 0.9 percent, less than half the expansion recorded in 2010. The Pound’s losses midweek were only temporary however, as the U.S. currency came under broad selling pressure after the U.S. Federal Reserve announced that it would keep interest rates near zero until late 2014 and may opt for more stimulus.

In light of this, sterling rose to $1.5719 (Interbank), its strongest since Dec. 22.

Although Sterling made gains of around 2% against the Dollar last week, market participants said these gains could be only temporary in nature. "Our view is still that this period of dollar weakness we've seen this year will prove temporary so we're not looking for cable to break back into the $1.60s," said Lee Hardman, currency strategist at BTM-UFJ. "Maybe the market is getting ahead of itself in terms of anticipating QE3, that does create some scope for disappointment which could help the dollar regain some lost ground in the coming month," he added.

To put last week’s gains into perspective, a typical purchase of $400,000 would have cost around £3010 less on Friday than if it had been bought on Monday. To take advantage of the recent gains, contact your dedicated account manager at Foremost Currency and take the first step to making the most of your currency.

If you need to buy or sell US Dollar, send me a free enquiry now.


Weekly Economic Data that may affect exchange rates

Monday – There are no UK releases of note today. In the EU however we have German Inflation Data (which can impact interest rates) and Retail Sales (which reflect consumer confidence). In the USA we see Personal Consumption & Personal Income data.

Tuesday – Starting in the UK we have Consumer Credit, Mortgage Approvals and Net Lending. Of more importance will be the EU unemployment figures released at 10am. In the afternoon we see Canadian GDP and Industrial Prices, and in the USA we see inflation data and a measure of consumer confidence.

Wednesday – Today Nationwide releases its house price data for the UK, which reflect the national economy as a whole. In the EU there are various releases of inflation for both Germany and the EU as a whole. In the states there are Mortgage Approvals, Manufacturing data, Employment Numbers and Car Sales data.

Thursday – We’ll start down under today – Australia has Building permits, Commodity prices and Trade Balance figures – if good this could push GBP/AUD even lower than it already is. The UK releases its PPI data this morning also. In the Eurozone there are also inflation figures. In the USA there are some important releases – Jobless Claims, Labour costs and Nonfarm productivity.

Friday – We end the week with more UK House price info, this time from the Halifax. There are also further inflation numbers to add to those released earlier in the week. The Eurozone also has further inflation numbers and Retail Sales. Across the pond, we have Non-Farm Payrolls and Unemployment data – both of which often affect GBP/USD rates.



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Sterling falls again on Poor UK data/Optimism on Greece

Friday 27th January 2012
Good morning. Sterling dropped yesterday to a 4 week low against the Euro on poor UK Retail Data, and hopes of progress in Greek debt talks bolstering the single currency. Against the US Dollar however, Sterling hit a 5 week high after a host of Economic data including Unemployment was much worse than expected, weakening the USD and making it cheaper to purchase. It's these points I'll cover today after the usual snapshot of yesterdays movements:

~Currency Movements on Thursday 26th January~











UK Data disappoints, weakening the Pound

Yesterdays UK data was the CBI Distributive Trades Survey, which is released by the Confederation of British Industry. It's an indicator of short-term trends in the UK retail and wholesale distribution sector, and can have an impact on the formulation of economic policy at the Bank of England and within Government.

The forecast was for a 12% gain, however the actual figure was a 22% decline. The poor result reversed the gains made on Wednesday, and pushed GBP/EUR rates to a one month low.

Also Reports that private holders of Greek debt would accept a lower coupon on new bonds, and a successful short-term debt auction in Italy, encouraged investors to cut hefty short positions in the euro. In plain English, this means there is now more hope of progress with regards to Greek debt, and as a result the Euro gained some strength, becoming more expensive to purchase and compounding the drop in Pound/Euro rates.

Sterling climbs to 5 week high vs US Dollar

As has been the case for some time, GBP/USD rates have been trading inversely, as the debt crisis drives flows of investment into and out of the US Dollar. So as a result of the better outlook in the EU, the Dollar has weakened off slightly.

Of more importance was yesterdays economic data from the states. There were various measures of Jobless Claims and Homes Sales from the USA yesterday, and all of them were worse than forecast. This also weakened the US Dollar slightly. In the last week GBP/USD had hit an 18 month low, so the spike to the upside should please anybody that needs to buy Dollars.

Today's Data

We end the week with Consumer Confidence figures for the UK, Money Supply data from the Eurozone, and the USA releases its latest GDP figures in addition to a measure of Consumer Sentiment.

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If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

UK GDP poor, QE in Feb, Pound rises - why?

Thursday 26th January 2012
Good morning. Yesterday GDP figures showed the economy contracted by 0.2% in the last quarter, and in the run up to the release Sterling fell across the board. The minutes to the BoE meeting to discuss QE however revealed all 9 members voted not to increase it, and this then lent some support to the Pound. Concerns about the European Central Bank having to write down its Greek bond holdings as part of a deal to avoid a disorderly default also weighed on the single currency, pushing GBP/EUR rates up.

Today we will look at the GDP and BoE release, analyse why it pushed the Pound up, and take a look at how QE in February may affect Sterling exchange rates. Below you can see the drop in the run up to the data release at 09:30am, and then the recovery after the BoE Minutes:

~Currency Movements on Tuesday 24th January~











UK GDP shows we're headed to recession

UK economic activity shrank by 0.2% in the last three months of last year according to official figures released yesterday, in the form of GDP. The figures, from the Office for National Statistics (ONS), are a preliminary estimate, which could be revised either up or down by 0.2%. The quarterly fall in GDP is the first since the last three months of 2010, when freezing weather was blamed for a 0.5% drop.

The new figure was worse than had been feared, as most economists had pencilled in a 0.1% fall in activity. It also indicates the UK could head back to recession, defined by 2 consecutive quarters of negative growth.

In the run up to the figures, the Pound dropped significantly, as the market was braced for a possible worse figure. When the actual figure was released, it was only 0.1% worse than forecast, and so the effect on exchange rates was limited. In fact Sterling actually rose against the Euro, but this was due to the BoE minutes, which I'll cover in the next paragraph.

Bank of England minutes cause Pound to rise, despite more QE on horizon

Bank of England minutes released yesterday morning showed members voted unanimously to keep total asset purchases at 275 billion pounds. However, the minutes also said a further expansion of asset purchasing was "likely" to be required. The fact that no BoE policymakers voted for an increase in QE this month is what caused the Pound to rise after the release.

Many clients were surprised the GBP/EUR rate rose despite worse GDP, but it's because nobody voted for QE, signalling it's not quite the certainty that it was. Analysts still think it will happen in February however, and as this has already been widely predicted, the Pound actually gathered a little support.

"If they are saying "likely" in the minutes that pretty much means definitely. That's a pretty strong word from the MPC who would normally sit on the fence," said Lee McDarby, head of corporate dealing at Investec Bank PLC.

Although the last round of QE in October did not weigh significantly on sterling, traders said the need for further economic stimulus added to a shaky outlook for the pound.

Concerns about the European Central Bank having to write down its Greek bond holdings as part of a deal to avoid a disorderly default also weighed on the single currency, pushing GBP/EUR rates up.

Today's Data

Today Germany releases its latest consumer confidence measures. In the USA there is a host of data including Jobless Claims & New Home Sales. New Zealand releases Trade Balance figures in the evening.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

UK GDP and BoE minutes effect on Sterling

Wednesday 25th January 2011
Good morning. The Pound briefly hit a 4 week low vs the Euro yesterday, before recovering to around €1.20. Sterling also rose against the US Dollar, despite many in the markets predicting today could well generate weakness for the Pound. At 09:30 am today we will see the latest GDP figures, and the minutes to the most recent Bank of England (BoE) minutes - both of which could cause significant volatility for Sterling. We'll focus on this today, after the usual snapshot of yesterdays movements:

~Currency Movements on Tuesday 24th January~











BoE Minutes and GDP - Important day for the Pound

Today at 09:30 we will see 2 important UK data releases that will have an impact on the future of Sterling. GDP figures are released which will show if the economy is growing or not, and at what pace. It's a measure of the total value of all goods and services produced by the UK, and is considered as a broad measure of the UK economic activity.

We predict that the monthly figure will show a -0.1% contraction. 2 consecutive periods of contraction mean we're officially back in recession, so if the number is indeed negative it could weaken the Pound. If it's zero or above, expect the Pound to make modest gains.

We also have the BoE minutes released at the same time. This shows the discussions and voting in the decision 2 weeks ago to hold interest rates and Quantitative Easing. If it shows they discussed QE, or the discussions hint it's on the way in February, expect weakness in the Pound.

What effect could this have on exchange rates?

Analysts said upcoming British data and events could add to concerns about the prospect of more quantitative easing as austerity measures and the impact of the euro zone debt crisis hurt the economy, potentially weighing further on sterling.

BoE policymaker Adam Posen said on Monday Britain's economic outlook had improved slightly but more quantitative easing would probably still be needed, so for the most part it could be that this is already priced in to rates. markets move as much (sometimes more so) on rumour than fact, so as it's widely predicted, it's difficult to predict what effect this might have on exchange rates.

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Pound falls against Euro, rises against US Dollar

Tuesday 24th January 2012
Good morning. Yesterday Sterling fell against the Euro by around 0.7%, pushing rates down to the mid 1.19's. Against the US Dollar, the Pound rose by around 0.5%, as the Dollar weakened on predictions it's interest rates will stay at record lows for some time to come. The below chart illustrates how exchange rates fared throughout trading yesterday:

~Currency Movements on Monday 23rd January~





















Pound rises vs US Dollar



As you can see, rates steadily rose to buy the Dollar yesterday, although many investors were cautious about pushing the pound up further on growing concerns the Bank of England will have to inject further cash into the fragile UK economy. Expectations that the U.S. Federal Reserve will keep interest rates low for some years to come helped to weaken the US Dollar and made it cheaper to purchase.



Sterling falls against Euro



The Pound did not fare as well against the single currency. The Eurozone crisis has not escalated any further since last week, and the lack of any further bad news has taken the focus off the Euro, helping it to recover some strength. As a result exchange rates have fallen away from the 18 month high we recently saw.

Poor UK GDP and possible Quantitative Easing hurts Sterling



This week we will see UK GDP figures, to show the economy contracted, a factor that is likely to undermine sterling in the short to medium term. Bank of England Governor Mervyn King is also due to speak this week while the minutes from the most recent BoE Monetary Policy Committee meeting on Wednesday are all likely to reinforce expectations for further asset purchases.



It's now widely predicted that the BoE will pump further money into the economy in February, unless data released in the meantime suggests the economy is growing, which is unlikely. For these reasons it could well be that the Pound continues to drop against the Euro, while any resolution to the EU debt crisis could cause the USD to weaken, pushing rates back towards the $1.60 levels.

Today's Data



Today is a little busier, with figures showing the latest UK Public Sector borrowing. In the Eurozone there are some inflation measures, and data showing Industrial New Orders. Across the pond we will see US Manufacturing data, and Canada releases Retail Sales which show how confident consumers are about the economy.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Weekly GBP/EUR & GBP/USD and the weeks data

Monday 23rd January 2012
Good morning. As always for a Monday, today I will take a retrospective look at last weeks movements in the currency markets, and what this week may hold for the Pound Sterling Forecast against the Euro & US Dollar. Also included is a list of the most important data to watch our for that might affect rates this week.

In this week’s Report:

• Pound/Euro remains range bound at €1.20

• Sterling recovers against weaker US Dollar

• BoE Minutes could signal further QE in February

• Round up of the week’s data that may affect rates

(For currencies other than GBP, EUR and USD, contact us for a consultation)


Sterling vs. Euro;

The start of the last week saw GBP/EUR rates trading around the 1.20 (Interbank) level as all eyes were still on the Euro zone. High UK unemployment figures and the hint of more Quantitative Easing could see a very volatile week ahead of us.













Tuesday’s key data showed a rise in unemployment within the UK and indicated that it had increased steadily through 2011. The number of Britons out of work hit its highest level in more than 17 years, but a much smaller than expected number of new benefit claims in December provided some hope that the labour market downturn may be levelling out.

With the UK government cutting hundreds of thousands of jobs as part of its five-year budget deficit reduction programme, unemployment is expected to keep rising. The private sector is picking up only some of the slack. "While the increase in headline unemployment this month is a negative sign, the strength of the claimant count measure provides evidence of some resilience in the labour market," said economists at Credit Suisse.

As the cost of living has continued to rise at more than twice the rate of underlying wage growth in the UK more pressure is put on households, hindering and slowing economic growth. The Nationwide have predicted that slowing inflation would help to ease the squeeze on household budgets and aid growth.

BOE minutes this week leave the door open on whether more Quantitative Easing will take place and what was and will be discussed in subsequent meetings. The last time QE was announced Sterling fell significantly and exchange rates dropped across the board. Due to the prediction of QE, it will be partly priced into the market prices already, and the EU debt crisis will also have an impact on the value of the Euro, Pound and US Dollar.

Do you need to buy or sell Euros? Click here to send me a free enquiry


Sterling vs. US Dollar;

The Pound started last week close to an 18-month low against the US dollar with the news that a handful of countries in the Eurozone had their credit ratings downgraded several days previously.













Britain’s economy has remained fairly stagnant over the past five months. A survey showed UK consumer confidence dropped close to its lowest level in seven years in December, adding to worries about a fragile UK economy. Recent weak UK data, including lower inflation numbers, have added to expectations the BoE will increase asset purchases under its quantitative easing programme next month. Caution will persist until news emerges from Greece, where the government and private bondholders are locked in negotiations about the size of any haircut on Greek debt.

This is the main reason that the dollar is so strong against the pound and the rates are sitting where they are. As stated above rates to buy Dollars are currently around an 18 month low, as the US currency appears very strong at the moment. This is nothing to do with any positive US economic data - it's simply the case that the USD is a safe haven currency, and with all the well-publicised problems in Europe and the UK, it's an attractive option at the moment.

The Pound pushed a little higher against the US Dollar at the end of the week, with gains after solid demand at a Spanish debt auction. Spain sold 6.61 billion euros of government bonds which was more than its announced target, in an auction that analysts said went well. This caused flows away from the US Dollar, weakening it and pushing rates up slightly, as the chart above shows.

US jobless claims released at the end of last week dropped to a new four-year low, which slightly dented the greenback’s safe-haven status and boosted the pound. The rates ended the week around 1.5520 on the interbank. This is a swing of around 1.5% throughout the week; meaning that you’re currency would have cost significantly more had you bought on Monday, instead of Friday. It is important to keep in touch with your account manager at the FCG so that they can give you the benefit of their experience and help you make the most of your currency.

Do you need to buy or sell US Dollars? Click here to send me a free enquiry.


Weekly Economic Data that may affect exchange rates

Monday – We have a very quiet start to the week, with no UK data of note. The only EU release is a measure of consumer confidence at 3pm. The other data is from Australia where we will see the latest measure of inflation.

Tuesday – Today is a little busier, with figures showing the latest UK Public Sector borrowing. In the Eurozone there are some inflation measures, and data showing Industrial New Orders. Across the pond we will see US Manufacturing data, and Canada releases Retail Sales which show how confident consumers are about the economy.

Wednesday – This will be the most important day of the week for Data. At 09:30am we will see the latest BoE minutes from their recent decision to hold rates and QE. These will show what was discussed, and who voted for what. Should this indicate further QE is likely next month Sterling could be affected. At the same time, UK GDP figures are released, which will show if the economy is growing, and at what pace. We also have the FOMC minutes from the USA, followed by an interest rate decision in both the USA and New Zealand.

Thursday – Today Germany releases its latest consumer confidence measures. In the USA there is a host of data including Jobless Claims & New Home Sales. New Zealand releases Trade Balance figures in the evening.

Friday – We end the week with Consumer Confidence figures for the UK, Money Supply data from the Eurozone, and the USA releases its latest GDP figures in addition to a measure of Consumer Sentiment.


If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Getting the best exchange rates for your currency

Friday 20th January 2012
Good morning. The Pound pushed a little higher against the Euro and US Dollar yesterday, tracking gains in the euro versus the dollar after solid demand at a Spanish debt auction, but its rise was limited by weak consumer confidence data that added to concerns about the UK economy. Below shows how GBP/EUR and GBP/USD moved yesterday:

~Currency Movements on Wednesday 18th January~











Good Demand at Spanish Bond Auction

At a bond auction yesterday, Spain sold 6.61 billion euros of government bonds which was more than its announced target, in an auction that analysts said went well. This caused the Pound to rise also due to it's links to the Eurozone, so despite some slight gains as shown by the chart, rates remain stuck around the €1.19 to €1.20 level. Analysts have said that the Euro's gains were likely to be limited as investors remain wary of any development that may cause the euro debt crisis to worsen significantly, with market players keeping a close watch on talks aimed at avoiding a messy Greek default.

For this reason, rates to buy and sell Euros remain around the €1.20 level where it has been for much of the week.

The news weakened the safe haven US Dollar slightly, making it cheaper to buy and pulling exchange rates up from the near 18 month low seen earlier in the week.

UK Data disappoints again, signalling more QE on the way

UK consumer confidence fell to pretty close to its lowest level in seven years last month, data showed yesterday. This has increased concerns over the fragile economy, and increases the risk of further Quantitative Easing next month. The last time QE was announced, Sterling fell significantly and exchange rates dropped across the board.

Of course due to the prediction of QE, it will be partly priced into the market prices already, and the EU debt crisis will also have an impact on the value of the Euro, Pound and US Dollar.

This is the latest is a run of poor economic data from the UK recently. Low inflation, and the number of Britons out of work at its highest in more than 17 years in November are all weighing on the Pound. UK GDP figures for the fourth quarter of 2011 are due next week, with some market players bracing themselves for very low growth or even a contraction in the economy.

Today's Data

Today’s UK release is Retail Sales; a good indicator of general consumer confidence. In Canada we will see the latest inflation figures. US data comprises Home Sales.

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Mixed day for Sterling as Unemployment/IMF drive markets

Thursday 19th January 2012
Good morning. It was a mixed day in the currency markets yesterday. Initially poor UK unemployment pushed Sterling lower against the Euro. However, as reports suggested the International Monetary Fund was proposing to boost its lending resources, this supported the euro and riskier currencies, pushing the Pound up later in the day. Below shows how GBP/EUR and GBP/USD moved yesterday:

~Currency Movements on Wednesday 18th January~











UK Unemployment figures disappoint

Figures released yesterday show that UK unemployment rose by 118,000 in the three months to November to 2.685 million. The Office for National Statistics (ONS) said the unemployment rate also rose to 8.4% from 8.3%, the highest since January 1996.

The numbers were slightly lower than analysts had forecast, and support the picture of a flat UK economy, with other data released on Wednesday showing average weekly earnings, including bonuses, grew at just 1.9%.

This pushed Sterling lower against other currencies as the Pound weakened.

IMF Bailout strengthens the Pound

Also yesterday, Bloomberg News reported that the IMF was planning a large expansion in its lending pool to safeguard the global economy against the worsening euro zone debt crisis. This supported riskier currencies, and caused both the Pound and the Euro to gain against other currencies. Also helping the Euro was a report that Italy was unlikely to default.

This was the main driver in exchange rates yesterday. The news meant investors were a little more confident in the Eurozone, and this caused the Dollar to weaken as money was moved away from the safe haven Dollar.

The net effect was Sterling/Dollar rates climbing, and Sterling/Euro rates climbing slightly. Euro rates didn't go up as much due to a strengthening of the Euro.

Emigrating to Australia?

Australia remains the top destinations for Brits emigrating abroad. Unfortunately the Aussie Dollar has been getting stronger and stronger in recent years, becoming more expensive to purchase. This is because they largely avoided the global recession and retain high interest rates relative to other countries.

Rates yesterday hit a new low, with rates briefly at their lowest in over 20 years. While this is not good news for anyone who has recently emigrated down under, those looking to bring AUD back to Sterling have not had it so good in a long time. Regardless if you need to buy or sell this currency, contact us today to discuss how we can protect you against rates moving against you.

Today's Data

Unusually for a Thursday, there is no UK data being released. The ECB will give a monthly report on the health of the EU economy, and Australia releases various measures of unemployment. Most data today is US based however; Inflation Data, Jobless Claims, Building Permits, and Manufacturing data.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Increased chance of QE pushes Sterling lower

Wednesday 18th January 2012
Good morning. Yesterday UK inflation figures increased the chance of further Quantitative Easing next month, pushing Sterling lower against other currencies. The Euro also strengthened a little earlier in the day after better than expected German data, however ongoing concern about sovereign debt limited the drop, with rates for Euros ending up where they started the day! Today we have various unemployment measure for the UK, which will likely have the biggest impact on rates. Below shows how GBP/EUR and GBP/USD moved yesterday:

~Currency Movements on Tuesday 17th January~











UK Inflation data increases chance of Quantitative Easing

Data released yesterday showed that UK inflation fell sharply in December, with the annual CPI rate dropping to 4.2 percent from 4.8 percent in November, supporting the Bank of England's view that consumer price inflation may have peaked. This lower than expected reading is likely to increase the chances that the Bank of England will embark on another round of Quantitative Easing next month.

Clear evidence of falling prices is a precondition for some BoE policymakers to back QE expansion, and so the numbers have caused the Pound to fall. Further data this week such as today's unemployment figures could add to the case, which may bring Pound/Euro prices down from the current highs.

So if UK data continues to disappoint, will GBP/EUR rates fall?

Investors are also mindful of UK economic weakness, with recent data pointing to a high risk of recession. There are lots of other key data releases coming in the next few weeks, and if they are poor it could weigh more heavily on sterling, which late last year was largely immune to UK worries as investors sought alternatives to euro zone assets.

Now however, with the EU debt crisis ongoing, focus is starting to return to core UK economic performance, which is poor at best and this could bring rates back down.

What about the US Dollar?

Rates to buy Dollars are currently at an 18 month low, as the US currency is very strong at the moment. This is nothing to do with any positive US economic data - it's simply the case that the USD is a safe haven currency, and with all the well publicised problems in Europe, it's an attractive option at the moment. Simple supply and demand dictates with the world wanting the safety of the dollar, it's becoming more and more expensive to purchase.

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Today's Data

Today's most important release will be unemployment numbers for the UK which will show the number of people out of work and claiming benefits. In Europe, there are some figures showing construction output. In the states we’ll see Inflation data, Industrial production, and the Housing Market index.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Pound remains supported against Euro

Tuesday 17th January 2012

Good morning. It was a very flat day on the markets yesterday, despite the downgrade of EU countries over the weekend by S&P. Pound Euro remained range bound just below a 16 month high, and Sterling Dollar remained around an 18 month low. This is all due to the EU debt crisis, with the downgrade keeping the Euro weak and the Dollar strong. The charts below show how rates moved throughout the day yesterday :-



~Currency Movements on Monday 16th January~























Eurozone credit rating downgrades



As you can see, there was little movement at all, and through the whole day the cost of €100k only varied by around £150. Very very quiet indeed compared to what we have been used to of late, however there is much happening this week that could change things.



Ratings agency Standard & Poor's last week downgraded the credit rating of nine euro zone countries including France and Austria after the close of London markets, however the rumours had been circulating all day, and as such there wasn't a huge reaction in the currency markets. The Euro had already weakened on the rumour, and as the news came when markets were closed there was little effect on exchange rates.



The news came as negotiations between Greece and private creditors on a debt swap deal broke down, raising the risk of a messy Greek default. What the downgrades do show however, is that global investors are now wary over investing in the Eurozone, and instead look for the safe haven US Dollar. The net effect is a weaker Euro (and therefore higher GBP/EUR rates) and a strong US Dollar (and therefore lower GBP/USD rates).



Sterling Euro is still very close to a 16 month high, however Sterling/US Dollar is near an 18 month low. Germany has retained its AAA credit rating, as the UK does. In the short-to-medium term the UK may benefit a little bit from being a triple-A rated sovereign but I think that will be called into question during 2012 as well, especially if we see further Quantitative Easing in February.



UK also affected by Eurozone debt crisis



It's important to remember that bad news for Europe doesn't automatically mean higher GBP/EUR rates. The UK is intrinsically tied into what happens in Europe. Indeed Sterling has benefited from safe-haven flows as investors that don't want to be exposed to EU debt bought UK gilts instead. The yield on British 10-year gilts fell to within a whisker of a new record low on Monday after the S&P downgrade reduced the pool of European triple-A rated sovereigns. This on it's own shows that there is some safe haven demand for the Pound.



However, some strategists said the fact that Germany, the euro zone's largest economy, was not downgraded could prompt some of those flows to be diverted into Bunds and remove a pillar of support for the pound. Overall, market players said more instability in the euro zone, the UK's largest trading partner, could spell trouble for sterling.



There were various news stories circulating yesterday predicting UK interest rates will stay low for some years to come, and that the UK is headed back into recession.



Summary - when should you buy/sell your currency?



There is much uncertainty in global markets at the moment. There are some factors that support the case that the Euro will continue to weaken, pushing GBP/EUR higher, however many analysts say the Pound will also weaken.



With so much uncertainty, nobody can predict which way exchange rates may move during 2012. There are however various ways we can help protect you against rates moving the wrong way, and strategies you can employ to help you achieve the best rate.



If you need to convert one currency to another, the amount is £5k+, and you need the funds wired to an account anywhere in the world - contact me now by clicking here. I can provide you with a free consultation on the options available to you, and ensure you make the most of your currency.



Today's Data



There is a host of UK inflation data out at 09:30am, in addition to Retail Price Index measures. The EU also has some inflation numbers, which could affect where interest rates move in February. Staying in the EU, there are various German measures of Economic confidence. Finally, an interest rate decision in Canada rounds off the day.



If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Weekly GBP/EUR & GBP/USD and the weeks data

Monday 16th January 2011
Good morning. As always on a Monday morning, today I will give a detailed summary of last weeks movements and the Pound Sterling forecast for Euro and US Dollar, in addition to the weeks data that might affect exchange rates.

In this week’s Report:

• GBP/EUR hits 16 month high before falling back
• BoE and ECB keep interest rates on hold, more UK QE expected in February
• US Dollar remains safe haven due to EU troubles
• Round up of the week’s data that may affect rates

(For currencies other than GBP, EUR and USD, contact us for a consultation)

Sterling vs. Euro;

We began last week with Sterling trading close to a 16-month high against the euro as focus remained on the debt and liquidity problems continuing to plague the single currency.













The outlook for the single currency was clouded ahead of Spanish and Italian debt auctions later in the week which were seen as a key test of sentiment. The auctions would gauge investor willingness to invest in the troubled euro zone sovereigns. German magazine Der Spiegel reported the International Monetary Fund was losing confidence in Greece's ability to work off its mountain of debt, while Germany and France also warned Greece it will get no more bailout funds until it agrees with specific conditions and pressed for an early deal to avert a potential default.

Sterling held near the 16-month high for the majority of the week but Thursday saw a reversal in fortunes with it losing a little over 1.5% to a slightly firmer Euro. The BoE held record low interest rates at 0.5% and decided not to add to its Quantitative easing program for the time being providing some relief but analysts and traders alike expect the BoE policymakers to expand the QE program next month in order to aid a flagging economy.

UK industrial production posted a surprise fall month-on-month, increasing expectations that the economy contracted in the final quarter of last year adding to speculation that we are on the brink of another recession.

Over in Europe however the ECB President Mario Draghi was less pessimistic, supporting the Euro and said the supply of cheap money released by the ECB was helping stabilise the Eurozone economy which he expected to recover albeit gradually. The Spanish bond auction saw strong demand and sold larger quantities of its sovereign debt than expected, at a lower price than expected.

There was a slight recovery for Sterling to the end the week as the Italian Bond auction received tepid demand and could not match the Spanish auction the previous day. There were also rumours S&P would be imminently downgrading several EU countries, however at the time of writing this had not happened. This further reinforced the volatile outlook for the currency pair and if you have an impending currency requirement the best way to navigate the violent swings in the exchange rate is to keep in close contact with your FCG account manager.

If you need to buy or sell Euros, send us a free enquiry now.

Sterling vs. US Dollar;

The Pound was relatively unchanged against the Dollar last week, trading within a range of just over 1 percent. The lack of data at the start of the week encouraged Sterling to recover to a high of $1.5471, but news on Wednesday from ratings agency Fitch that the Euro could collapse unless the ECB became more active in European sovereign debt markets caused renewed risk aversion and the gains were very quickly lost.













This news also caused the EUR/USD rate to fall to a 16 month low of 1.2660. Sterling’s losses were compounded further after figures showed that the UK trade deficit widened in November as exports fell and imports increased, however December’s figures are expected to be better.

Weaker than expected US retail sales on Thursday were preceded by a fall in UK industrial output for the second consecutive month, almost cancelling each other out but we would have expected a slight recovery in Sterling after the Bank of England decided to maintain the current amount of Quantitative Easing (QE) at £275bn. It is still widely expected however that they are playing a waiting game and the scale of asset purchases is being “kept under review”, therefore most analysts expect to see a further expansion of QE announced at the February meeting and this will more than likely keep Sterling on the back foot.

UK inflation data next week is expected to show another fall towards 4% and could show that the Bank of England have time to keep UK monetary policy loose which would keep Sterling depressed against the Dollar, especially while unemployment figures on Wednesday are expected to be poor again. While US data is showing that the economy isn’t doing as well as most of the presidential candidates would like, it still looks like developments in the Eurozone will be the key driver of Cable.

With the USD being the world’s “safe-haven” currency, further problems within the Eurozone will more than likely continue to increase demands for the Greenback at the detriment of Sterling. At time of writing this we are waiting on an announcement from another of the big ratings agencies Standard & Poors who are expected to downgrade an unnamed European nation and this has forced the GBP/USD mid-market rate back into the 1.52’s.

Anyone looking to trade GBP/USD also has events outside the UK & US to consider so it is more important now than ever to keep in touch with us to make sure you are making an informed decision when buying or selling your currency.

If you need to buy or sell US Dollars, send us an enquiry now.

Weekly Economic Data that may affect exchange rates

Monday – We kick off the new week with UK Housing Prices from RICS. In Europe, we see German wholesale prices. Markets are closed in the US for Martin Luther King Day. New Zealand has a release showing Business Confidence.

Tuesday – Things start to get a little busier today, with a host of UK inflation data out at 09:30, in addition to Retail Price Index measures. The EU also has some inflation numbers, which could affect where interest rates move in February. Staying in the EU, there are various German measures of Economic confidence. Finally, an interest rate decision in Canada rounds off the day.

Wednesday – Today sees unemployment numbers for the UK which will show the number of people out of work and claiming benefits. In Europe, there are some figures showing construction output. In the states we’ll see Inflation data, Industrial production, and the Housing Market index.

Thursday – Unusually for a Thursday, there is no UK data being released. The ECB will give a monthly report on the health of the EU economy, and Australia releases various measures of unemployment. Most data today is US based however; Inflation Data, Jobless Claims, Building Permits, and Manufacturing data.

Friday – Today’s UK release is Retail Sales; a good indicator of general consumer confidence. In Canada we will see the latest inflation figures. US data comprises Home Sales.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Pound falls against Euro after Interest Rate decisions

Friday 13th January 2012

Good morning. Friday the 13th. Unlucky for some, and certainly unlucky for those that did not take advantage of the 16 month high in rates this week, as levels have now dropped back away. In yesterdays post I pointed out that in 3 years, the GBP/EUR rate had gone through €1.20 several times, only to quickly correct downwards, and that a repeat could be on the cards. Indeed, after the Interest Rate decisions yesterday, the Pound fell after positive comments from the ECB president strengthened the Euro. We'll take a detailed look at what happened after the usual snapshot of where rates moved throughout trading yesterday:



~Currency Movements on Thursday 12th January~

Bank of England leave Interest Rates and QE on hold



UK interest rates have been held at their record low of 0.5% by the Bank of England's Monetary Policy Committee. Interest rates have now been at their record low since March 2009. The Bank did not announce any increase in its policy of quantitative easing. In October, the Bank said it would pump another £75bn into the economy.



The decisions were widely expected, and come amid concerns over the economy's strength due to weak consumer spending and the eurozone crisis. It caused no surprises in the currency markets, although we still think further QE will be on the cards in the coming months. If and when they do, expect Sterling weakness. I'll put my neck out and predict that they will announce an extension to QE in February. We shall see.



European Central Bank leave Interest Rates on hold



Shortly after the Bank of England decision, the ECB also announced no changes to it's interest rate, as expected. The decision followed two consecutive months of rate cuts, which were aimed at boosting the currency bloc's growth.



At a news conference, ECB president Mario Draghi said the eurozone economy was still experiencing "high uncertainty and substantial downside risks". However, he also made reference to balanced deflation risks, amd this may cause some to review their expectations.



Certinaly his comments had the effect of strengthening the Euro, pulling GBP/EUR rates over 1% down from the 16 month high seen earlier in the year. It's often been the case that his comments cause swings in exchange rates.



Protecting against adverse rate movements



I've recently talked about Stop Loss orders. Many clients chose to take advantage of these this week in order not to lose out on the best exchange rates in a long time. This is where when rates are good, but you don't want to purchase your currency in case things get even better. You place a Stop Loss at a level below the current rate, and if the market drops, your currency is purchased, giving you a safety net and a worst case scenario.



Those that chose this option should be pleased - the market levelled off at a 16 month high on Monday, and hardly moved all week. Following the events of yesterday, the market has dropped, and those with Stop Loss orders in place limited their loss by having their currency bought at a pre-agreed level.



In addition to Stop Loss orders, we can help you with Limit Orders and Forward contracts. Whichever type of contract you choose to place with us, our exchange rates are up to 5% better than you can achieve at the bank, potentially saving you thousands.



If you have a currency requirement, either now or in the future, click here to send me a free enquiry, and take the first step to making the most of your currency.

Using the services of an expert currency broker like ourselves can have benfits other than the obvious one of better exchange rates. We have various market tools, expert market knowledge, and the direct contact and customer service you just can't get at banks these days. Compare us to your existing broker or bank today.



Today's Data



Today the UK releases its latest inflation figures. The Eurozone and USA releases Trade Balance numbers, and there is also a US consumer Sentiment measure.



If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

BoE and ECB Interest Rate Decisions today

Thursday 12th January 2011

Good morning. Today we'll look at the Pound Sterling forecast against other major currencies such as the Euro and USD. The Pound fell to a near 1 year low against the US Dollar yesterday. Against the Euro the Pound also ended the day down.



Trade balance figures were worse than expected, but the main reason was repositioning ahead of today's announcements by the Bank of England and European Central Bank. The below charts shows how rates moved throughout the day yesterday:



~Currency Movements on Wednesday 11th January~

Bank of England (BoE) announcement today





Today is a very important day for the Pound. At 09:30am we will see the latest manufacturing and industrial production figures. This is followed by an announcement at 12:00pm by the BoE on interest rates and Quantitative Easing (QE).





Most in the market expect rates to be left on hold, and no further QE stimulus. There is a small chance further money will be pumped into the ailing economy however, and it is this that is keeping the Pound in check against other currencies.



Trade balance figures were released yesterday and were slightly worse than expected, pushing the Pound slightly lower. This morning figures will be watched closely and if they are very poor, it could push the case for another round of QE.



It's an outside chance, but if it does happen expect the Pound to fall sharply. If you don't want to risk a drop, consider placing a Stop Loss order, so if rates do fall your currency will be bought at a pre-agreed level of your choice. This protects you against a drop, while allowing you to continue making gains should rates remain stable.



Contact me now to discuss Stop Loss orders.





European Central Bank (ECB) announcement today





Following the BoE decision, the ECB follow at 12:45pm with their interest rate decision. Again, I expect them to hold rates at 1%, but in recent months they have made 2 cuts in interest rates. Further cuts could weaken the already poor Euro. There are also some inflation and production figures for Germany/EU today.



Following the interest rate decision, the ECB president will give a lengthy press conference afterwards, where he will give an outlook of the EU economy. Watch this closely as quite often any positive or negative comments can significantly affect the GBP/EUR rate.



So will Pound/Euro rates continue to rise?



What will happen going forwards largely depends on if there is a resolution to the debt crisis. Some analysts think rates could continue to climb, while others cite weak UK growth as a reason to believe this spike is short term.



Nobody can predict the markets, so the only real forecast can be based on past performance. This is the 5th time in 3 years the GBP/EUR exchange rate has broken through the €1.20 level, and each and every time it has been followed by a sharp downward correction. While nobody can foretell whether the same will happen in 2012, the hard facts are this: GBP/EUR is at a near 16 month high, and nobody knows if or when global markets will stabilise.



If you need to buy or sell Euros and don’t wish to gamble on exchange rate movements, contact me today about the different ways we can help protect against any adverse exchange rate movements that could prove very costly indeed.



If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Pound/Euro forecast outlook for 2012 Q1

Wednesday 11th January 2011
Good morning. Another calmer day, with the market finishing up pretty much where we started at the beginning of the trading day. Initially sterling slipped against the Euro, falling below the €1.21 level as investors trimmed bets to sell the single currency across the board, but the pound hovered near a 16-month high hit the previous day as sentiment towards the euro remained negative. Below you can see how rates for GBP/EUR and GBP/USD moved through the day yesterday:

~Currency Movements on Monday 9th January~











Pound remains near 16 month high vs Euro

As the charts above show, the GBP/EUR rate slipped throughout the day before recovering later. This was reported to be due to Euro demand from a UK clearer ahead of one of the Bank of England's afternoon fixings had pushed the single currency to the day's high. Demand strengthens a currency, and makes it more expensive, resulting in the drop.

Later in the day however, the Euro weakened again, pushing rates back towards the 16 month high recently seen. This is because if European officials are seen taking their time on solving the debt crisis, which could push more weak countries towards bailouts or even debt defaults. This is what is keeping rates supported at the moment, despite gloomy UK economic figures causing weakness for Sterling.

The most important release of the week will be the Bank of England rate decision on Thursday. We expect them to again hold rates at 0.5% and not to pursue any further Quantitative Easing, however there is an outside chance they could do so. I certainly expect more stimulus within the next few months if the economy continues to struggle, and this could weaken the Pound pushing exchange rates back down again.

While the EU debt crisis remains unresolved, and the UK retains its AAA credit rating however, it's likely GBP/EUR rates will remain supported.

UK Data disappoints

Other data released yesterday showed house prices fell at a marginally slower pace in the last quarter, but were expected to fall further. Retail Sales figures were also up for December, but the figures were being compared to last year, when you needed a snow shovel and ski-gear in order to get to the shops, so markets took the spike with a pinch of salt (unavailable at the time of the snow ironically!)

Sterling slips near dollar; USD strength could weaken Pound more


The pound was up a little against the US Dollar, but remained just below the $1.55 levels. Analysts see a risk of sterling weakness if the safe haven USD continues to get stronger and appreciates as the euro debt situation worsens. This could spell more weakness for sterling given that it has been closely tracking moves in the single currency against the greenback.

Today's Data

Today we will see UK Trade Balance figures, which often affect Sterling, especially if the numbers show a deficit. Germany releases GDP growth figures. In the USA there are Mortgage Applications and the Fed’s Beige Book, which is a report on the current economic conditions in the USA.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Sterling remains range bound vs Euro

Tuesday 10th January 2012
Good morning. It was a much calmer day on the markets yesterday, after the volatility we saw last week. Sterling/Euro fell a small amount, but stayed around the 16 month high seen last week. The cross was range bound between just below €1.21 and €1.2130. The GBP/USD rate was also fairly stable yesterday. The charts below show rate movements:

~Currency Movements on Monday 9th January~











Sterling remains Range-bound vs Euro

There was no key data of note released for the UK yesterday, and as such there was little movement in the Sterling/Euro rate yesterday, but buying levels remain around the 16 month high, ahead of Spanish and Italian debt auctions later in the week.

These auctions are going to be seen as a key test of sentiment towards the beleaguered Eurozone. They will gauge investor willingness to invest in troubled euro zone sovereigns after newspaper reports over the weekend added to concerns the crisis is intensifying.

Also to look out for this week will be the meetings between French President Nicholas Sarkozy and German Chancellor Angela Merkel. They are due to meet to discuss final details of a deal to increase fiscal coordination in the region, but analysts said no significant new measures were expected. Indeed, the last few times they have met with many in the market expecting landmark measure, the markets were left disappointed, and we expect much the same with this meeting.

The euro zone debt crisis has helped the Pound in recent months, as it created investment in the UK gilt market due to investors seeking a safe haven away from the Euro.

But analysts said this flow was more a result of concerns about the euro zone than confidence in UK economic fundamentals. UK growth was weak in 2011 and is expected to remain so. Some in the market expect the UK to fall back into recession, so comments from the Bank of England later this week will be interesting to see.

There is also the outside chance we will see more Quantitative Easing by the Bank of England this week, although Personally I think this is unlikely until February at the earliest.

Today's Data

In the UK today we see BRC Retail Sales and RICS Housing Prices. There are no EU releases today, but Australia has Building Permits and confidence measures. Stateside, there are measures of economic optimism.

If you need to buy or sell foreign currency, click below now to send us an enquiry for free. Our exhange rates are up to 5% better than offered by banks. Take the first step to making the most of your currency now.

Weekly GBP/EUR & GBP/USD and the weeks data

Monday 9th January 2011
Good morning. Pound/Euro rates have surged to a 16 month high, so today as usual for a Monday morning, I will take a look at movements in the last week for Euro, US Dollar, forecasts for where exchange rates may go in 2012, and the weeks economic data that could affect exchange rates.

In this week’s Report:

• Sterling/Euro hits 16 month high above €1.21
• EU problems continue, weakening Euro
• GBP/USD rates fall as US jobs data surprises
• Round up of the week’s data that may affect rates

(For currencies other than GBP, EUR and USD, contact us for a consultation)

Sterling vs. Euro;

Last week the Pound benefited against the Euro as the single currency slumped to its lowest level in 16 months, driven by fears that the Eurozone countries and their banks may be crumpling under the mounting pressure of their debts.













Shares in two Italian banks, including Unicredit, were suspended after sustaining heavy losses. Spanish banks also suffered last week after the Spanish finance minister said the banking sector would need a €50bn injection to aid recapitalisation. French and German banks were also hit, although to a lesser extent. The seemingly inexorable debt crisis led economists at the International Monetary Fund (IMF) to urge Asian banks to prepare themselves for turbulent times ahead.

The euro dropped to 82.39 pence (1.2137), its lowest level since September 2010. The pound's strength was down to euro zone weakness rather than a strong domestic economy, even though data on Thursday showed an increase in UK service sector activity.

However, figures released on Friday showed UK house prices fell 0.9 percent in December, in contrast to analysts’ forecasts. This however, had little impact on the currency and the Pound continued gaining strength against the Euro, gains which are expected to continue according to some analysts.

"I think euro/sterling will continue to go lower. All the problems that have caused euro zone bond markets to sell off in the fourth quarter have not only not been resolved, they look set to intensify," said Neil Mellor, currency strategist at Bank of New York Mellon.

Sterling’s gains last week were helped by Investors preferring the UK over euro zone government debt, boosting sterling, given UK deficit-cutting austerity measures that are already in place and the Bank of England's independent monetary policy committee.

To put last week’s gains into perspective, a typical purchase of €200,000 would have been £2080 cheaper on Friday than if it had been bought on Tuesday.

If you need to buy or sell Euros, send me a free enquiry now.

Sterling vs. US Dollar;

The New Year has seen a renewed level of volatility in the currency markets, which as the chart below shows, has been witnessed on the GBP/USD cross. Overall the Pound has had a positive start to 2012 initially rising against the Dollar after having dipped off in the tail end of December:













This early move can in part be explained by a surprising uplift in the manufacturing sector which was reported on the first working day in the UK. Indeed, an up-lift in global economic data from varying sectors had a positive impact for the perceived risky currencies, of which the pound is one and the Dollar is not.

Analysts’ expectations were not as overly positive as traders however, they were swift to remind the markets that although the final 2011 UK manufacturing figures were positive, they were the exception not the rule. The overall Q4 manufacturing figures were actually the worst since Q2 2009 and the overall view is that it may be unavoidable for the UK not to slip back into a technical recession. Again the chart below shows the dip off in the Pound as analysts’ views hit the market.

Indeed the slip in rates was compounded further last week by the hotly expected Non-Farm Payrolls on Friday lunch time. The marquee data release for US employment data showed a creation of 200,000 jobs in the non-farming sectors of the US economy last month, nearly 50,000 more than the predicted rise.

Furthermore these rises lead to a drop in overall unemployment in the US from 8.7 to 8.5%. The graph above went to print slightly before these figures were release otherwise another downward spike would be visible as over a cent was lost on cable after the NFP broke.

Looking ahead to next week we forecast further volatility that could easily see the spikes we saw in the week gone by. The market is still very much all eyes on Europe; what happens with the upcoming Bond sales across the EU will have a great effect on the Dollar which is still heavily benefiting from its safe haven status. Any further boosting of US technical data will only enforce this further.

To the upside for those looking to buy Dollars, the housing market over the pond is still stuttering so watch for further figures there, and any unilateral and positive moves from the big guns in Europe to sure up their issues will see cable rates move in their favour.

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Weekly Economic Data that may affect exchange rates

Monday – We kick off the week with Australian Retail Sales and Home Sales. In the Eurozone there are German Trade Balance and Industrial Production Figures, in addition to EU wide investor confidence Measures. The only data of note from the UK is Halifax House Prices. The USA releases measures of the amount of consumer credit.

Tuesday – In the UK today we see BRC Retail Sales and RICS Housing Prices. There are no EU releases today, but Australia has Building Permits and confidence measures. Stateside, there are measures of economic optimism.

Wednesday – Today we will see UK Trade Balance figures, which often affect Sterling. Germany releases GDP growth figures. In the USA there are Mortgage Applications and the Fed’s Beige Book, which is a report on the current economic conditions in the USA.

Thursday – As usual, today is the biggest day of the week for UK and EU data, so expect choppy movements in the GBP/EUR rate. Starting in the UK, we have Industrial Production, Manufacturing Production and an Interest Rate decision from the Bank of England. In the EU we see German Inflation figures, EU Industrial Production, an Interest rate decision followed by a speech by the ECB president. There could be a rate cut in the EU which may weaken the Euro. Across the pond, we see Jobless figures from the USA, in addition to Retail Sales and a Budget Statement.

Friday – Today the UK releases its latest inflation figures. The Eurozone and USA releases Trade Balance numbers, and there is also a US consumer Sentiment measure.

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