GBP recovers despite possibility of UK recession

Friday 30th March 2012
Good morning. Well, what a difference a day makes. After seeing Sterling fall earlier in the week as outlined in my recent post the Pound regained ground against a beleaguered Euro yesterday, however the Pound did fall away from the recent highs against the Dollar. And all of this on the back of a host of poor economic data.

So to end the week, let's look first at the data we had yesterday, then I'll explain why the Pound actually gained against the Euro despite this!

Poor UK Data casts shadow over UK economy

Yesterday saw quite a bit of UK economic data that was worse than forecast. Firstly we saw that mortgage approvals fell last month, and money supply for February posted its biggest monthly fall on record. This was followed by figures showing poor growth in Britain's dominant services sector. We then learned that UK House Prices had their sharpest drop in over 2 years.

Then, to put the icing on the cake of doom the Organisation for Economic Co-operation and Development (OECD) has calculated that the UK economy shrank in the first three months of the year - if true this means we're back in recession that I also touched on yesterday. You can read more about the OECD figures here on the Telegraphs website. All of the above came just a day after data unexpectedly showed the UK economy had contracted more than previously thought in the fourth quarter of 2011.

So, with all the poor data why did the Pound gain against the Euro?

There was an interesting report on the Reuters website that British electricity supplier International Power had received a proposal from its majority shareholder, French utility GDF Suez, to buy shares it does not hold already.

This basically meant there could be a huge demand for Sterling, and this speculation caused the Pound to gain a little. As the chart shows we saw steady gains throughout the day yesterday.

It was mostly however due to the Euro weakening and becoming cheaper to buy. Italian and Spanish government bond yields rose while Italian credit default swaps also moved higher, reflecting investor worries that the EU debt crisis is ongoing and that Greece may need further funds.

The news weakened the Euro enough to brush of the poor UK data, and that's why the Pound rose against the Euro yesterday.

Sterling falls against US Dollar

Despite gains made against the single currency, the Pound fell from it's recent 4 month high against the US Dollar. With the poor UK data and also weakness in the Euro likely to drive investors towards the safe haven US Dollar, I don't expect rates to break $1.60. If anything I wouldn't be surprised to see rates fall for GBP/USD this year given the current climate.

Today's data that might have an effect on exchange rates

There are no UK releases today. To end the week we have German Retail Sales, EU Consumer Confidence. Stateside watch for Personal Consumption Expenditure figures, Inflation data, and a consumer sentiment survey.

Getting the best exchange rates

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Pound falls on revised UK growth figures

Thursday 29th March 2012
Good morning. It was a glorious day with unbroken sunshine across the UK yesterday, however the sun was not shining on the Pound, which took a drop against other currencies. So why did Sterling fall during trading yesterday? It dropped to a 2 week low against the Euro and also dropping from it's recent highs against the US Dollar. This was due to data unexpectedly showed the UK economy contracted more than previously thought in the fourth quarter of last year. In today's post we'll look at this and how it affects the Euro Rate forecast going forwards.

Sterling falls on growth figures

Figures released yesterday morning showed that UK gross domestic product contracted by 0.3 % in the last 3 months of 2011, which was worse than the forecast for an unrevised 0.2% fall on the quarter.














What does this mean for exchange rates?

It means there is a small risk of the UK going back into recession, and this has weakened the Pound. We've now had one quarter of negative growth of -0.3%. If figures next month show the first 3 months of 2012 also had a contraction, then it's the technical definition of a recession.

While this is unlikely as forecasts suggest growth so far in 2012, it did hurt the Pound, especially as it comes days after Bank of England Governor Mervyn King warned the challenges facing the UK economy, and saying that Britain faces a long road back to economic growth.

As you can see in the charts showing yesterdays GBP/EUR and GBP/USD movements, the figures pushed Sterling lower and pulled exchange rates down.

My view is that this is probably a temporary dip. With focus on the Eurozone debt crisis, this blip for the UK will be largely overshadowed, however it may mean that any decent recovery for the Pound will now be limited. Rates for Euros dropped into the low €1.19's yesterday, but remained within my predicted 1.19 to 1.20 range for GBP/EUR rates. The Euro debt crisis will likely keep Pound/Euro supported, but I don't expect it to get significantly above €1.20.

Indeed as I outlined in yesterdays post, historically over the last few years rates of €1.20 have been short lived, and are often following by a significant fall in Pound/Euro buying levels. If I had Euros to buy, I would probably look to secure rates while they are close to 18 month highs, especially given the global financial volatility at the moment.

What do other analysts say?

"There is a degree of consolidation in sterling after the sell-off of the dollar," said Derek Halpenny, currency strategist at BTMU.However, he argued the fundamental outlook was not too negative for the pound.

"There are some positives for sterling relative to the euro (due to problems in Europe) and even relative to cyclical currencies like the Australian and New Zealand dollar from a valuation perspective."

Elswhere Peter Dixon at Commerzbank said "What does it mean? Probably not a lot. But it kind of makes the starting point for 2012 that little bit more difficult,". I agree with him comments.

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.

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Pound at 4 month high vs US Dollar, flat vs Euro

Wednesday 28th March 2012
Good morning. The Pound/Euro rate has been pretty flat so far this week, remaining around the €1.19 to €1.20 range. Against the US Dollar rates briefly hit a 4 month high above $1.60, before retreating slightly. Today we will take a look at what is causing recent movements, and the forecast for GBP/EUR and GBP/USD for the coming weeks.

Sterling remains range-bound vs Euro

Let's start with the Pound/Euro exchange rate, which remains around the €1.20 level. It did briefly drop by half a point yesterday morning when the first round of economic figures were released, however the drop was not to last.

At 12:00pm yesterday the CBI Distributive Trades Survey was released by the Confederation of British Industry. This is an indicator of short-term trends in the UK retail and wholesale distribution sector, and tends to have an impact on the formulation of economic policy at the Bank of England and within Government, and so can often impact Sterling.

The figures were much better than analysts had forecasts, and the Pound steadily recovered throughout the day, pushing back towards the €1.20 level.

What is the Pound Euro Forecast for where rates may head?

We're getting mixed messages from analysts at the moment. On the one hand the EU debt crisis is not resolved and this is keeping the Euro weak. It's important to remember however that there is no fundamental strength in the Pound, it's simply the fact that we have our own central bank to print money, and a well established austerity plan that the markets like. This is keeping the Pound supported against other currencies... for the moment.

Supporting this view was Bank of England policymaker David Miles, who said earlier this week that economy had effectively stalled, with growth rates near zero over the last six months, keeping alive slim chances of another round of quantitative easing. A bulletin released by the BoE yesterday suggested that asset purchases by central banks have helped economies weather their crises, and so the sluggish UK growth is keeping alive the prospects of more QE.

My view is that while the threat of more QE is on the horizon, the Pound will not make any significant gains against the Euro. It will likely remain range-bound between €1.18 and €1.20, but any resolution to the EU debt crisis could pull rates back down. In fact for several years now, we have seen rates above €1.20 only to sharply drop back away within a month or two. If you need Euros at the best possible rates, then send me an enquiry now to find out how you can protect yourself against the rate dropping.

EU Debt crisis: OECD urges eurozone rescue fund boost

The OECD has said that the eurozone needs to double its bailout fund to €1 trillion, however German Chancellor Angela Merkel said she would favour only a temporary increase. The reason for the proposed increase is that some fear that the fund will not be able to cope with another bailout.

At the moment we've seen bailouts already for Greece, Ireland and Portugal. While this has given some stability to the markets and kept exchange rates stable, the chance is still there that other countries, namely Spain and Italy, could require some funding. This shows that the EU debt crisis is far from over, and is keeping rates supported around the €1.20 level.

Adding to the problems in the EU, Spain confirmed yesterday that they had fallen back into recession. It contracted again in Q1 this year, and in the last quarter of last year. 2 consecutive quarters of negative growth is a 'technical' recession.

Sterling hits 4 month high against US Dollar

Despite the stability in GBP/EUR rates, the Pound/Dollar rate actually gained quite well yesterday, and rose to its highest in more than 4 months. The dollar was hit by increasing chances of more U.S. monetary easing, which weakened it and made it cheaper to purchase.

Given rates are now quite favourable, those that need the best exchange rates for Dollars can look at a Forward contract - lock in the rate now for up to 2 years, and only lodge 10% of the funds now, the remainder due when you want the currency. If this is of interest to you contact us to discuss it further.

Today's Data to watch out for

We start in Germany again today, with inflation numbers at 7am. A few hours later the EU releases money supply data. US figures this afternoon include Durable Goods orders. There are no releases of note today 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.

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Sterling/Euro Forecast, Sterling/Dollar, Fundamental Data

Monday 26th March 2012

Good morning. Regular Readers will notice the blog has had a Spring clean and a fresh new look for the new season. While the look of the blog has changed, the content has not - knowledgable currency reports to help you decide when to convert your currency, and commercial exchange rates that are significantly better than you can achieve elsewhere. As always for a Monday, today we will look at last weeks movements in exchange rates.

In this week’s Report:

• UK Budget has little impact on exchange rates


• Sterling/Euro remains range bound at €1.19/€1.20


• Pound/Dollar climbs near $1.60, but forecasts mixed


• 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 began positively for Sterling as it climbed to a 13-month peak against the euro on a recent run of improved UK data. Additionally, there were no surprises in the UK budget, but analysts warned that the key to whether sterling would sustain a bounce will be the response of ratings agencies, which may express concern if the budget focuses too much on growth-boosting measures at the expense of deficit-reduction efforts.

Sterling slipped on Tuesday but remained close to its recent highs after UK inflation eased less than forecast in February, but focus remained on the Chancellors Budget announcement. Wednesday morning saw Sterling fall away from the 13-month high by a little over 0.5% after the release of much higher-than-anticipated public sector borrowing for February. Any future deterioration in the borrowing figures could persuade ratings agencies Fitch and Moody's to carry out their threat to downgrade the UK's prized AAA sovereign debt status, which in turn could be a potential source of weakness for the UK currency.

The BoE minutes later in the day contributed to further weakness as the minutes returned a little more negative than most analysts were expecting. George Osborne’s much anticipated 2012 Budget however was perceived as largely neutral for Sterling, the chancellor was seen to be sticking with the coalition government's austerity drive which aims to bring the country's finances back into line in five years.

Sterling fell a further half a per cent on Thursday, after weak UK retail sales data resurrected concerns over a lack of growth in the UK economy, fuelling a reversal in speculation of more Bank of England asset purchases (QE). Retail sales suffered their biggest monthly drop in nine months in February, with further disappointment coming from sharp downward revisions to January's releases.

The Pound ended the week on a much quieter note with Friday bringing little in the way of the volatility we had seen during the rest of the week. If this week demonstrates one thing, it’s that the outlook for the UK economy and Sterling is far from certain. The economy continues to send out mixed messages and if you have an impending currency requirement the market uncertainty could leave you paying significantly more for your currency than is necessary.

If you need to get the best possible exchange rates, then you should compare the rates I can help you achieve to make sure you're getting the best possible deal. Click here to send me an enquiry and have a free consultation on what I can offer.

Sterling vs. US Dollar;

After experiencing a seven week low in mid-march, the GBP/USD rate strengthened last Monday and crossed the $1.59 barrier (interbank) which was the highest level seen since the beginning of March.













In the early part of the week the GBP/USD remained flat as the markets awaited key data in the form of Bank of England minutes and the UK budget. The minutes showed a surprisingly negative slant as rate setters Adam Posen and David Miles pushed for more quantitative easing to try to stimulate the economy. Sterling subsequently slipped against the dollar with this news and is a stark reminder for investors that the British economy is still in a vulnerable position.

"Sterling is being moved a lot more by what's going on elsewhere but I was shocked by the dovish nature of the minutes as most people thought more QE in May was off the table and this puts the risk of it back on," said Kathleen Brooks, research director at FOREX.com.

The following day the pound showed little reaction to what analysts and ratings agencies described as a fiscally neutral UK budget. Fitch ratings said finance minister George Osborne's proposals showed commitment to deficit reduction and would not impact the UK's AAA rating. The outlook for sterling depends on the economy - it could take a long time for recovery to take root, and sterling probably will only rally when there are signs that's happening. “About the best you can say of the budget was that it won't hurt” said analysts at Societe Generale.

It was a busy week in the US for data with most of it having little effect on rates. But unemployment data released last week showed a drop to the lowest level in four years, reinforcing signs the U.S. labour market is picking up. Jobless claims also decreased by 5,000 to 348,000 which continue to keep rates at a decent level.

GBP/USD has been choppy recently with the mixed economic figures coming out of both countries. We continue to see the pair make moves in both directions and many analysts are torn over their forecast with some thinking that the cross will end up towards the $1.50 level within the next twelve months, and others believing firmly that the 1.60 barrier will be broken very soon.

With so much volatility between the GBP/USD, it's wise not to leave things to chance. If you need to buy or sell dollars, send me a free enquiry now to find out what rate I can achieve for you.

Weekly Economic Data that may affect exchange rates

Monday – We start the week in the UK with Nationwide Housing Prices. At 9am Germany releases sentiment measures including Business Climate, Current Assessment and Expectations. Stateside we have some Home Sales Data at 3pm.

Tuesday – Germany has the first release of the day, with Consumer Confidence released at 7am. At 09:30am UK data starts to flow, with GDP figures and Business Investment measures. GDP in particular could have an effect on Sterling. There is also a Trend Survey from the UK today. Other data today is from the USA: Home Prices, Consumer Confidence, Manufacturing numbers and a speech by FED chairman Ben Bernanke.

Wednesday – We start in Germany again today, with inflation numbers at 7am. A few hours later the EU releases money supply data. US figures this afternoon include Durable Goods orders. There are no releases of note today from the UK.

Thursday – German unemployment is released today, but most data is from the UK: Consumer Credit, BoE Credit report, Money Supply, Mortgage Approvals and net lending. All of this is released at 09:30am so watch for any effect on the Pound. We also have UK Confidence measures released in the evening. Before that there is a host of US data including GDP, Jobless Claims, Industrial Production and another speech by Ben Bernanke.

Friday – There are no UK releases today. To end the week we have German Retail Sales, EU Consumer Confidence. Stateside watch for Personal Consumption Expenditure figures, Inflation data, and a consumer sentiment survey.

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.

Budget, Sterling/Euro forecast & Regular Payments

Thursday 22nd March 2012
Good morning. Pound/Euro had a mixed day yesterday. Higher than expected borrowing figures pushed rates lower in the morning, however rates were to recover later in the afternoon. The Budget had little to no effect on exchange rates at all, and was perceived as neutral for the currency. Today we will look at the Budget, the Bank of England minutes, and how to get the best deal for Regular Payments in Euros. Below shows rate movements throughout the day yesterday:

~Currency Movements on Wednesday 22nd March 2012~











UK Budget

The budget delivered yesterday was pretty much as expected, contained no real surprises and had no effect on Sterling exchange rates. The chancellor George Osborne was seen to be sticking with the coalition government's austerity drive which aims to bring the country's finances back into line in five years, though sluggish growth hampered by fiscal cuts remains a concern to investors.

As it had little effect on rates, I won't go into any real detail on the budget here, but for those that are interested, the key points are outlined here on the BBC website.

Of interest to me were 2 key facts; Independent Office for Budget Responsibility (OBR) revises up UK growth forecast for 2012 to 0.8% - from 0.7% - better growth should be good for the Pound in the long term.

Also, borrowing this year to be £126bn - £1bn less than forecast in the autumn. Predicted to be £120bn in 2012-13 and £98bn in 2013-14. Forecast to fall to £21bn by 2016-17. Again, lower borrowing would cut the deficit and could give the Pound a boost should it prove to be the case.

Higher borrowing figures published just before the budget

The Office for Budget Responsibility's forecasts for growth and borrowing detailed by Osborne were marginally more optimistic than the previous estimates, but the earlier release of much higher-than-expected public sector borrowing for February pulled the Pound down, as illustrated in the charts above. Any future deterioration in the borrowing figures may well mean that ratings agencies Fitch and Moody's downgrade the UK's prized AAA sovereign debt status, a potential source of weakness for the UK currency.


BoE Minutes

The BoE's latest policy minutes were largely overshadowed by the budget, but they showed two policymakers voted for more monetary stimulus to support the economy. Most in the market had expected a unanimous vote for asset purchases to be left on hold following the February decision to increase the scheme by 50 billion pounds to 325 billion. This also put Sterling under pressure before getting better later in the day.

Making Regular Payments

When owning property overseas, many people will need to make Regular monthly transfers between Pounds and Euros. The natural inclination is to arrange this sort of thing through your bank; however it’s usually a fairly expensive way of doing it. When making Regular Payments on a monthly basis, we can save you money compared to your bank through lower costs and much better exchange rates. Our Regular Payment Plan means you simply set up a Standing Order for the amount you want to convert, and your transfers happen automatically.

We purchase all the Euros in bulk, meaning that you can achieve commercial exchange rates even on smaller amounts. Due to the better rates and lower costs, sending €1000 per month over 10 years could save you nearly £10,000.00 compared to using your bank, as the figures below illustrate.











(Figures based on Foremost rates and typical bank rates on 21st March)

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

How will the 2012 Budget affect exchange rates

Wednesday 21st March 2012
Good morning. It's budget day - so today we will look at how will the UK 2012 budget affect exchange rates, and the implication for the Pound Sterling Forecast and Euro Rate Forecast. It's been the usual story for Sterling so far this week. On Monday we hit a high of €1.2071, however as has often been the cast in the last few months, the highs were not to last, and yesterday the Pound fell back against most currencies, as the chart below shows.

~Currency Movements on Tuesday 20th March 2012~











Sterling falls against Euro ahead of Budget

The Pound fell against the Euro yesterday after UK inflation fell to the lowest in over a year. This means interest rates are likely to stay on hold for the foreseeable future, slightly weakening Sterling.

The UK Currency has had a good run in the last few days, after being underpinned by a recent run of better data. According to Reuters Sterling rose to a 13-month peak against a trade-weighted basket of currencies on Monday. Analysts expect it to extend gains if there are more signs of economic improvement, while some expect it could benefit from the UK's annual budget on Wednesday.

Budget Today

Today the chancellor will announce the latest budget. As ever, the BBC has an excellent outline of what to expect on their 2012 Budget page. Much of it will not affect the currency markets, but undoubtedly there will be financial aspects of it that will. The key points of the budget that might affect Sterling are likely to be as follows:

• The government's basic economic strategy will not change
• The basic economic numbers will not change
• This will be a fiscally neutral budget
• A note of caution on income tax
• The European debt crisis

In a nutshell, it's all to do with investor confidence. If the budget outlines plans that look good and make the UK an attractive place to invest, the Pound may make some gains. If there are no surprises in the budget, and there is nothing there that changes anything, we could see the Pound fall slightly.

Some analysts say sterling could gain a boost if UK finance minister George Osborne announces some measures to support growth in a fiscally neutral budget, still leaving the country on course to reduce a hefty deficit.

"The expectations are for the Chancellor of Exchequer (finance minister) to announce lower tax rates, more generous tax allowances which together with the credit easing scheme announced yesterday should stimulate domestic demand and thus boost growth," Citi analysts said in a note to clients.

But they warned that key to whether sterling can sustain a bounce will be the response of ratings agencies, which may express concern if the budget focuses too much on growth-boosting measures at the expense of deficit reduction efforts.

To discuss how rate movements might affect your currency requirement, send me a free enquiry now.

BoE minutes at 09:30am

Today we will also see the latest Bank of England minutes, showing the discussions and vote split to their recent decision to hold interest rates and QE. These minutes often have a big impact on Sterling, although today they may be overshadowed by the budget.


Do you need the best exchange rates?

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Weekly GBP/EUR forecast, and the weeks data

Monday 19th January 2012
Good morning, and welcome to another new week in the currency markets. It should be an interesting one, with both the UK Budget and BoE minutes being released on Wednesday. With GBP/EUR rates remaining above €1.20, will they go up or down in the next few weeks or months? Let's move on to the Monday roundup of last weeks movements, and see what's in store this week.


In this week’s Report:

• UK Budget this week could affect Sterling
• Pound/Euro rates remain above €1.20
• Credit Rating downgrade threat for UK
• Round up of the week’s data that may affect rates

Sterling vs. Euro;

Today we will look in detail at the following.... Last week saw the Euro zone finance ministers finally approve the second Greek bail-out package, Increased UK unemployment rates and Fitch’s warning that the UK’s credit rating changing from stable to negative. Market movement’s saw the week open in the 1.18’s, ending back near the 1.20 level (Interbank):













The start of last week saw euro zone finance ministers agreeing the second Greek Bail-out package. Attention then moved to Spain as the government confirmed the nation would not meet the EU deficit goal for 2012 as the economy looks set to enter into a recession. European Central Bank President Mario Draghi called on banks and governments to make the most of a lull in the sovereign debt crisis.

Markets took the comments as a hint that the lull in the Eurozone crisis could be short lived. This was reflected within the market as we saw level’s move up towards the 1.20 mark nearing the 16 month high we saw in January. Why has Pound/Euro rates gone up? It's due to fears the debt crisis will rear it's head again soon, weakening the Euro.

UK unemployment rose by 28,000 to 2.67 million during the three months to January, with the unemployment rate at 8.4%, according to figures from the Office for National Statistics (ONS). The rise in unemployment was the lowest rise in almost a year and has said to be “stabilising” (Employment Minister Chris Grayling).

The unemployment news followed some more positive data for the UK economy as retail sales rose by a surprise 0.9% in January as fears of a recession fade, seeing Sterling strengthen against the Euro.

Fitch warned that it could downgrade the UK in the next few years if the government does not contain the level of public debt. The warning comes as Chancellor George Osborne puts the finishing touches to this year's Budget. This week could see increasing volatility for the GBP/EUR as the Bank of England minutes and the Budget are announced on Wednesday.

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You can fix the current exchange rate for up to two years in advance. You secure your rate with us and lodge a 10% deposit; you then settle the remaining 90% when you want your currency to be transferred. In this way you can budget effectively, safe in the knowledge you have secured rates at a high while being protected against any adverse exchange rates movements.

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Weekly Economic Data that may affect exchange rates

Monday – We kick off the week with Rightmove House Prices. Shortly after the EU releases construction output. In the states we have a FED speech, and the housing market index. Finally in Australia there is a speech by an RBA member.

Tuesday – Starting in the UK we will see Retail Price Index, Consumer Price Index and the CBI Industrial Trend survey. EU data comprises of inflation numbers from Germany. US Data is Housing Starts and Building permits.

Wednesday – Of huge importance today is the UK budget. This could contain some surprises and so we expect a volatile day for Sterling. Also today we will see the Bank of England minutes to their recent decision to hold interest rates and QE. It will be interesting to see discussions and votes and this could affect Sterling. In the USA there are some Home Sales figures. In New Zealand there are GDP figures which could affect GBP/NZD rates.

Thursday – Retail Sales are released in the UK today. In Europe we have a host of inflation numbers in addition to Industrial New Orders. Later in the data EU Consumer confidence figures are releases. Stateside we have Jobless claims.

Friday – A quiet end to the week with US Home Sales the only data of note.

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

Pound steady, but credit downgrade threat mean downside risks

Friday 16th March 2012
Good morning. The currency markets have been fairly stable in the last 2 days, with Pound/Euro remaining steady around the €1.20 level. Better than expected unemployment data has given Sterling some support, but threats of a UK credit rating downgrade mean we could see the Pound start to slide again soon. Yesterdays movements:

~Currency Movements on Thursday 15th March 2012~











UK Unemployment

UK unemployment rose by 28,000 to 2.67 million during the three months to January, with the unemployment rate at 8.4%, according to figures from the Office for National Statistics (ONS). The rise in unemployment was the lowest in almost a year.

Despite the high figures, they were actually lower than forecast, and the slowing rise is good news for the Pound, which gained following the release.
















UK Credit Rating under threat

The Fitch and also Moody's credit ratings agencies have put the UK's top AAA rating on "negative outlook". Fitch Ratings warned earlier this week that it could downgrade the UK in the next few years if the government does not contain the level of public debt. Last month, another agency Moody's said it was also watching the UK's credit worthiness.

The other leading agency, Standard and Poor's, still has the UK on AAA, with no warning of a possible future downgrade. The move came just a week ahead of Britain's budget and reinforced expectations that finance minister George Osborne is likely to keep fiscal policy tight to ensure that Britain does not lose its prized top-grade rating.

This news means the Pound may not last long at the current high levels against the Euro. "If you look at the UK on the fiscal side there is relatively little topside potential for sterling and I think all the good news has been priced in terms of fiscal austerity," said Daragh Maher, currency strategist at HSBC.

US Dollar gains

The dollar has risen against most major currencies this week after the Federal Reserve appeared less dovish than expected at the end of a regular monetary policy meeting, leading to a repricing of interest rate expectations. This has pushed GBP/USD rates down slightly, although we saw a recovery yesterday.

The rise in Treasury yields along with an improvement in U.S. data has supported the U.S. dollar and led to a sell off in the yen, the Swiss franc and higher-yielding currencies like the Australian dollar.

Today's Data

We end the week with Trade Balance figures from the EU. Inflation data is released from the USA later in the day along with industrial production. There are no releases from the UK today.

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

Pound Euro climbs to €1.20 again - will it go higher?

Wednesday 14th March 2012
Good morning. Sterling had a very good run yesterday, gaining against both the Euro and US Dollar. The gains were in part due to better than expected Trade Balance figures, coupled with ongoing concerns over Euros that weakened the Euro significantly following comments from the Eurozone Central Bank president. The charts below show how the Pound gained throughout trading yesterday:

~Currency Movements on Tuesday 13th March 2012~










UK Trade Balance Better than expected

The UK's trade deficit was less than expected in January, thanks to strong exports of cars to the US, China and Russia, according to data released yesterday.

The deficit on seasonally adjusted trade in goods and services was £1.8bn in the first month of the year, compared with £1.2bn in December, but less than analysts had forecast. The news gave Sterling a boost against other currencies.


Euro weakens following ECB president comments

European Central Bank President Mario Draghi yesterday called on banks and governments to make the most of a lull in the sovereign debt crisis as he seeks to get the ECB back to its main job of ensuring price stability.

Policy makers “see continued signs of stabilization” in the economy and banks “should use this currently more benign environment to strengthen their resilience further, including by retaining earnings, cutting dividends and bonuses,” Draghi said in a speech in Paris today. “The financial system should serve the economy, not the other way round.”

Markets took the comments as hints the lull in the Eurozone crisis could be short lived, with some forecasters increasing the chance of an interest rate cut in the EU. Lower interest rates mean a lower return for investors, and therefore generally weakens a currency.

This weakness was clearly demonstrated yesterday, with the single currency becoming cheaper to buy and GBP/EUR rates again climbing back towards the €1.20 level. Looking at recent trends as a guide, it may not last long at this level. It has reached this level several times in the last few months, only to rapidly drop back away.

Today's Data

Today there are unemployment figures from the UK which could affect the Pound. In the EU we have various inflationary measures in the form of Consumer Price Index. There are also measures of Industrial production, reflecting the state of this sector. In the USA Import prices is the main data.

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Weekly GBP/EUR forecast, and the weeks data

Monday 12th March 2012
Good morning, and welcome to a new week in the currency markets. As customary for a Monday morning, today I will take stock of last weeks movements in exchange rates, particularly the Pound/Euro cross. In addition, I will look at the weeks data releases that may have an impact on the value of the Pound vs other currencies.

In this week’s Report:

• Euro gains strength on Greek debt swap deal
• No change in EU or UK Interest Rates
• EU debt crisis continues to drive exchange rates
• 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 another fairly choppy week’s trading for the sterling/euro cross, as once again headlines were dominated by the continuing Greek debt crisis. After dropping into the €1.17’s the previous week, Sterling began a recovery against the euro as recent positive UK data has helped support the pound, as concerns over another round of quantitative easing have been dampened. The British Chambers of Commerce, the largest business lobby group in the UK, revised down its forecast for economic growth in 2012 but said there would be no need for further monetary stimulus by the Bank of England.













Worse than expected house price data on Tuesday did little to affect sterling’s performance against the euro during the early part of the week as investors were more concerned over the mounting uncertainty over Greece's progress in completing a debt swap deal. A survey by mortgage lender Halifax showed house prices dipped 0.5%in February, compared to forecasts of a 0.3% rise.

The pound lost ground against a firmer euro midweek as the market focused on events in Greece and after European Central Bank President Mario Draghi said there were signs of stability in the euro zone economy.

There was very little else in the way of events or data releases for the UK last week, apart from a Bank of England policy decision on Thursday which resulted in no change to the quantitative easing target or to interest rates. The Bank of England's announcement marks the third anniversary of the bank's decision at the height of the financial crisis in 2009 to cut interest rates to a record-low 0.5% and start buying financial market assets with newly created money. As expected, the pound showed little reaction to this.

"Sterling's movements in the near term will be more the result of euro/dollar ... The euro has been rallying as there is a more optimistic feeling about Greece and Draghi was more neutral with no suggestion of an imminent rate cut," said Audrey Childe-Freeman, EMEA head of currency strategy at JP Morgan Private Bank.

"The Bank of England was a non-event, but the minutes will be very interesting for clues on whether we should prepare for another round of QE or not."

The pound ended the week trading in the mid 1.1950’s against the euro, slightly down on where it started Monday around the 1.20 level. Even a half cent change in rates can make a significant difference in the return on your sterling, particularly for larger transfers.

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Weekly Economic Data that may affect exchange rates

Monday – It’s a quiet start to the new trading week, with nothing of note from the UK. The main event is in Europe, where EU Finance Ministers are meeting today. There are also German wholesale prices. There is also a monthly budget statement from the USA.

Tuesday – UK data today comprises RICS House Prices & Goods Trade Balance. In the Eurozone there are EU and German confidence surveys. Retail Sales from the USA are released later in the afternoon, in addition to a US interest rate decision coupled with the FOMC minutes in the evening.

Wednesday – Today there are unemployment figures from the UK which could affect the Pound. In the EU we have various inflationary measures in the form of Consumer Price Index. There are also measures of Industrial production, reflecting the state of this sector. In the USA Import prices is the main data.

Thursday – We’ll start in Switzerland today, where there are economic forecasts and an interest rate decision; we expect rates to be left at 0%. In the EU we have a report by the ECB, coupled with Employment and Jobless measures. We also have Jobless data from the USA in addition to PPI inflation data.

Friday – We end the week with Trade Balance figures from the EU. Inflation data is released from the USA later in the day along with industrial production. There are no releases from the UK today.

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Pound/Euro falls March 2012 forecast predictions

Friday 9th March 2012
Good morning. Why has Pound/Euro fallen? Yesterday the Pound fell against the Euro, and rose against the US Dollar. It was developments in Greece and the EU that drove rates, with renewed optimism over the EU economy strengthening the Euro and other riskier currencies such as Sterling. So, the Pound gained against many currencies, but fell against the Euro, as the charts below illustrate:

~Currency Movements on Thursday 8th March 2012~











Euro strengthens on optimism over Greece

The Euro gained strength yesterday, becoming more expensive to purchase. It was due to Greece making progress on their debt swap. Analysts said the euro may have scope for short-term gains on a positive outcome to the Greece deal.

As the market focused on events in Greece, European Central Bank President Mario Draghi said there were signs of stability in the euro zone economy, and basically stated Greece would be allowed to default if necessary. This gave renewed optimism about the EU economy, and as such the Euro gained strength, along with other riskier currencies such as Sterling. This is why Pound/Euro exchange rates have fallen March 2012.

ECB and BoE leaves interest rates on hold

As I predicted yesterday, both central banks left rates on hold, and the BoE decided not to pursue any further Quantitative Easing for the time being. It's what the market expected, and so the decisions had little effect on exchange rates.

Going forwards, I think that at some point later this year, the ECB will make a rate cut which could weaken the Euro. Also the minutes to the BoE decision in 2 weeks time, will shed more light on if and when more QE will be on the way.

Today's Data

We end the week with a host of UK data including the latest GDP estimate, Trade Balance, Industrial Production, Manufacturing Production and Producer Price Index figures. Germany also releases Trade Balance numbers and inflation data. Stateside there are unemployment data and more trade balance figures - also we have the all important non farm payrolls, which often has a big effect on GBP/USD rates.

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Greek debt swap - how could it affect exchange rates?

Thursday 8th March 2012
Good morning. The Pound fell slightly yesterday against the Euro and US Dollar, as a fragile UK economy and weak technical outlook weakened Sterling. Today we will see UK and EU interest rate decisions, and also details on the Greek bond swap, which needed to avoid a disorderly default. We could see quite a volatile day for exchange rates. Today I will look at this in detail, after a snap shot of how rates move through the day yesterday:

~Currency Movements on Tuesday 6th March 2012~











UK and EU Interest Rate decisions today

It's the first Thursday in the month, and so we will see the Bank of England (BoE) and European Central Bank (ECB) Interest rate decisions. I expect both central banks to leave rates on hold, and no increase in the Quantitative Easing (QE) measures from the BoE.

Despite no change in policy expected today, recent positive UK data have dampened prospects for more monetary easing from the Bank of England. This has helped the Pound gain in recent weeks against other currencies. However, with UK growth sluggish at best and inflation seen falling back towards the Bank of England's target, more asset purchases could still be on the horizon, so don't expect any significant gains for Sterling.

Greek debt swap today; crucial for Greek bailout

Today is the deadline for the Greek debt swap. This is where private sector bondholders, such as banks and pension funds, must agree to take a 53.5% cut in the 206bn euros of Greek bonds they hold. If they don't, then Greece will not get its latest bailout of 130bn euros, meaning they may well suffer a disorderly default, which would be a disaster for the Euro.

75% of Bond holders need to agree, or no money for Greece. At the time of writing, 58% had agreed, falling short of the required amount. You can read more about the deal itself here on the BBC site. The deal is seen as determining whether or not the country can remain in the euro.

EU stocks have suffered this week on speculation the deal would not happen, and this had also weakened the Euro, helping rates climb to near the €1.20 level. Most analysts do expect the deal to go through. If it does, GBP/EUR rates could fall slightly. If it doesn't, we could see further Euro weakness, although whether rates will climb much above the €1.20 level remains to be seen.

Either way it's a crucial time for the EU debt crisis, and as such could cause some volatility in exchange rates. If you need to buy or sell Euros, contact us now to find out how the current situation may affect you, and what you can do to protect yourself.

Today's Data

As always for the first Thursday in the month, both the UK and EU decide on Interest Rates, with no change expected. The BoE will also decide whether to expand the QE programme, but this is highly unlikely. Elsewhere, in the USA we see some Jobless Claims, and there is also an interest rate decision for Canada. Of course, the Greek debt swap deal will be very closely watched by the markets.

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Pound/Euro rates range bound at €1.20

Wednesday 7th March 2012
Good morning. For Pound/Euro rates, it's been a very flat week so far with the cross being range bound around the €1.20 level. Sterling fell against the US Dollar however due to a fall in House Prices and poor Retail Sales. Weakness in the Euro has counteracted the fall in the Pound, which is why GBP/EUR has hardly moved, as yesterdays chart demonstrates:

~Currency Movements on Tuesday 6th March 2012~











Pound/Euro rates remain flat around €1.20

As the graph above shows, GBP/EUR rates again hardly moved yesterday, and were in the 1.1980 - 1.2010 range all day long. The Pound actually weakened early in the day following a fall in UK House Prices, and poor Retail sales suggesting the economy is still sluggish.

The exchange rate then bounced back due to mounting concern over the Greek debt issue. The bailout deal still isn't fully agreed, and there is a deadline on Thursday regards bond auctions which could mean Greek suffers a disorderly default. The news worried investors, and the Euro weakened as a result, pushing rates back to €1.20 or so.

Despite the relatively good rates, it would appear the pair cannot sustain levels above €1.20. The rate keeps briefly breaking through this barrier, only to correct lower quite quickly. The current rate is only just below the best in 19 months, so for any Euro buyers that want to take advantage of the rate, send me a free enquiry now.

Pound/Dollar drops to 11 day low

Due to the poor UK data, GBP/USD rates fell yesterday. The rumours coming from te Eurozone also helped to strengthen the Dollar, so while we saw GBP/EUR recover in the afternoon, the GBP/USD rates continued to fall as the charts above clearly demonstrate.

With the EU debt story far from over, I personally think the US Dollar could continue to strengthen, which may well pull GBP/USD even lower in the coming weeks.

Today's Data

There are GDP figures today from down under. Staying with the antipodean currencies, there is a New Zealand interest rate decision. The only EU data of note are German Factory Orders. Most data today is from the states: Employment, Productivity, Mortgage Applications and Consumer Credit.

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

Monday 5th March 2012
Good morning. Last week the Pound surged against the Euro, close to a 19 month high. As usual for a Monday, today I will take stock of what moved the market last week, the outlook and Pound Sterling Forecast for Pound Euro rates March 2012. Today I will purely focus on this currency pair, in addition to a breakdown of the weeks data that I think will affect exchange rates.

In this week’s Report:

• Bank of England comments strengthen Sterling
• ECB Start LTRO; find out what this means for rates
• Pound/Euro forecast for March/April 2012
• Round up of the week’s data that may affect levels

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

Sterling vs. Euro;

The Pound had a very good run against the Euro last week gaining over 2 cents from where it started on Monday morning due to the scaling back of expectations of more Quantitative Easing (QE) from the Bank of England, and the European Central Bank pumping more cash into their banking system. The data earlier in the week was pretty mixed and the Sterling/Euro pair traded in a very tight range of around ½ a cent.













It was Wednesday when the rate started to increase as the ECB started a liquidity operation known as a LTRO (Longer-Term Refinancing Operation) that enabled Eurozone banks to borrow an unlimited amount of medium term debt at a subsidised rate. Also earlier in the day we heard that Standard & Poor’s, one of the big ratings agencies, had downgraded Greece’s credit rating.

The figures from the LTRO showed that 800 Eurozone banks took advantage of the subsidised debt on offer by borrowing EUR 529.3bn up from the last auction in December when only 523 banks went in for funds. For the Eurozone this will hopefully mean that participating banks will be able to cover their funding needs in the short term and relieve some pressures on the EU banking system.

We also saw that the Euro area unemployment rate had edged up slightly in January which put more of a squeeze on the single currency but it wasn’t all plain sailing for the Pound either. We have seen mixed data from the UK over the last few weeks and on Thursday UK manufacturing PMI dropped to 51.2 in February (50 is the level that divides expansion from contraction) showing that the recent improvement in manufacturing may be losing pace. While this isn’t disastrous, if the more important service sector PMI due on Monday follows suit then we could see the Pound come under some pressure.

There is expectation that the Greek bailout package is close to being approved and according to press reports, officials are expected to meet again on Friday to give a final sign-off so that may give the Euro some support.

What will move exchange rates in the coming months?


All in all there are a multitude of factors that will continue to affect the GBP/EUR cross over the coming months; the “will they/wont they” argument about QE in the UK, whether or not the UK economy is really back on track, further Eurozone downgrades for economies and banks alike, and the continuing debt crisis in Europe to mention but a few of the main ones.

Whatever happens over the next couple of weeks, we still expect mid-market rates to remain range-bound between 1.175 & 1.205 which may not sound like much of change but when put into perspective on a €250,000 purchase, it can make a difference of over £5,000.

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Weekly Economic Data that may affect exchange rates

Monday – Today’s UK data comprises Halifax House prices and Inflation data. In the Eurozone there are also inflation numbers that may affect future interest rate movements. We also see EU Retail Sales showing how confident consumers are about the economy. Elsewhere, there are some Factory and Manufacturing numbers from the USA.

Tuesday – The only UK data today is the BRC Retail Sales Monitor. If more importance will be the latest EU GDP figures, so expect a choppy day for GBP/EUR rates. In Australia there is an interest rate decision; no change is expected but the RBA has surprised us in the recent past.

Wednesday – More GDP figures today, this time from down under. Staying with the antipodean currencies, there is a New Zealand interest rate decision. The only EU data of note are German Factory Orders. Most data today is from the states: Employment, Productivity, Mortgage Applications and Consumer Credit.

Thursday – As always for the first Thursday in the month, both the UK and EU decide on Interest Rates, with no change expected. The BoE will also decide whether to expand the QE programme, but this is highly unlikely. Elsewhere, in the USA we see some Jobless Claims, and there is also an interest rate decision for Canada.

Friday – We end the week with a host of UK data including the latest GDP estimate, Trade Balance, Industrial Production, Manufacturing Production and Producer Price Index figures. Germany also releases Trade Balance numbers and inflation data. Stateside there are unemployment data and more trade balance figures.

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Pound rises against Euro March 2012 Forecast predictions

Friday 2nd March 2011

Good morning. Sterling has had a very good run this week, rising against the Euro and US Dollar following positive comments from the Bank of England, coupled with continued uncertainty over the Greek Bailout. Today I will look at what has caused the Pound to rise against the Euro March 2012. The below charts show rate movements yesterday:



~Currency Movements on Thursday 1st March 2012~























Why has the Pound risen against the Euro?



The Pound rose higher yesterday against the Euro, despite UK manufacturing data that was slightly worse than forecast. This was due to less chance that the Bank of England will embark on another round of quantitative easing in the next few months. There are also hopes that the British economy will not plunge back intro recession, and this also gave Sterling some strength.



BoE governor Mervyn King nudged the bar higher on Wednesday when he told lawmakers the bank will be guided by upcoming data when deciding whether to print more money. It had been thought that another £25bn of stimulus would happen in the next few months, but the latest data has reversed these expectations.



When QE is on the cards, the Pound generally weakens due to the chance of the flooding of Pounds into the economy. Now this is less likely, the Pound has gained against other currencies.



Euro weakens, becoming cheaper to purchase



The euro also weakened yesterday by around 0.3%, and this compounded the rise in GBP/EUR rates. The Euro came under broad pressure after a massive injection of cheap funds for the European Central Bank - as with QE, when there is a flood of funds, the increased supply reduces demand, making it cheaper to purchase.



With rates now very close again to the €1.20 level, it's looking good for those that need to buy Euros. In recent times on every occasion rates have reached this level, the rate has dropped back away quite quickly again. With this in mind, if you need to buy Euros click here to find out how we can help protect against rates going the wrong way, and get you a level of exchange up to 5% better than banks or other brokers.



Today's Data



The EU economic summit continues, and there are further inflation numbers for the EU. There are some minor construction numbers from the UK, and GDP figures released from Canada at 13:30.



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