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

Monday 30th April 2012
Good morning. As always for a Monday morning, today I'll take a look back over the last weeks events in the currency markets, and the forecast for where GBP/EUR rates may go in the next few months. It was certainly a very interesting week with the UK officially back in recession, but despite this, GBP/EUR rates are at a 22 month high, and GBP/USD rates at a 7 month high. So without further ado let's find out why!

In this week’s Report:

• UK returns to recession
• Pound remains strong vs. Euro and US Dollar
• EU political uncertainty weakens Euro
• Round up of the week’s other data that may affect rates

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

Sterling vs. Euro;

What could have been a very bad week indeed for the Sterling/Euro cross ended up with Sterling sitting on a 22 month high against the Euro, despite the UK going into recession.













The start of the week saw the markets waiting in anticipation for the GDP figures which were released on Wednesday with most analysts believing that the UK economy would continue to grow. News came out that the economy had shrunk by 0.2% which led to a sharp downward spike in the markets pushing the interbank into the mid-1.21s.

It was a big surprise that the UK had slipped back into a double dip recession, the first since the mid ‘70s, especially as UK consumer confidence is at a nine month high, showed by figures released by the Nationwide Building Society. Despite the figures showing contraction, the GDP figures will be revised several times in the next 6 weeks, which is another reason the markets didn’t react too much to the news, as the revised figures could of course show that we are not in recession after all.

GBP/EUR rates briefly flirted with the idea of dropping below the 1.21 level, but the drop was short lived and gains were quickly seen for Sterling as it climbed back up towards the highs that we have seen recently. Fundamentally the Euro zone still has its problems and these seem to outweigh the fact that the UK is back in a recession, hence the reason why rates remain supported at high levels

The Euro dropped further against the pound as the fragility two Euro governments came to light. The French elections are rumbling on with Sarkozy losing in the first round, and Dutch Prime Minister Mark Rutte resigning due to losing the support of the liberal-conservative coalition government sending the Dutch Government into crisis.

Also weakening the Euro was news from the Bank of Spain, when they said that their economy contracted by 0.4% for the first 3 months of the year plus by 0.3% in the final quarter of last year. This bad news was further compounded when Spain was hit by the news that rating agency Standard & Poor's downgraded its credit rating.

All of this has helped the pound keep its strength against the Euro which is now at a 22 month high. It means that this is potentially a good time to buy Euros, so if you haven’t already spoken to your FX Trader it is time to do so. Even if you don’t need your funds for some time, with a ‘Forward Contract’ you can fix the current rate for up to 2 years into the future, and only lodge a 10% deposit of the total you want to convert.

If you need the best exchange rates, send me a free enquiry now.

Sterling vs. US Dollar;

What a week it’s been for the pound/dollar cross, after Wednesdays news that the UK slipped back into recession cable jumped to its highest levels for seven months to $1.6230 as the graph below shows. Dollar weakness was the main driver as Fed Chairman Ben Bernanke left the door open for further monetary stimulus.













After a relatively stable start the week the GDP data release on Wednesday saw Sterling fall away as the UK economy fell back into recession. As the data was released rates fell from $1.6160 to 1.6080 before recovering throughout the day and pushing back over the $1.61 mark.

The UK economy slipped back into recession after contracting by 0.2% during the first three months of 2012. A recession is described as two consecutive quarters of contraction and the recent results follow on from the fourth quarter of 2011 where the economy dropped by 0.3%.

The news that the UK economy had shrunk for a second consecutive quarter came as a bit of a surprise, over the last few weeks we had seen a batch of positive data support claim that the UK could avoid the double dip. However, a fall in construction output was believed to be the reason behind the unexpected contraction.

You would think that the UK heading back into a technical recession would have led to further losses for the GBP/USD cross. But with U.S unemployment being so high it was always likely that Mr Bernanke would keep the door open for further monetary stimulus; these thoughts were also supported by the US data release that core durable goods orders contracted by 1.1% when the forecast had been for 0.6% growth.

On the back of the Fed Chairman’s speech Sterling climbed to its highest level for more than seven months against the dollar, Mr Bernanke said that U.S monetary policy was “more or less in the right place” but the central bank would not hesitate to enter into another round of quantitative easing if the U.S economy were to weaken.

It seems the UK has bounced back from Wednesdays news as data released towards the end of the week showed that UK consumer confidence reached a nine-month high in March, according to the Nationwide Building Society, the confidence index increased to 53, up nine points from February.

There is so much uncertainty surrounding the U.S and UK economy, getting the timing right on your currency transfer remains critical, if you are buying or selling dollars in the coming months contact your FCG account manager to discuss the different options available.

If you need the best exchange rates, send me a free enquiry now.


Weekly Economic Data that may affect exchange rates

Monday – We kick off the week with a host of data from the Eurozone: German Retail Sales, EU Money Supply and EU Consumer Price Index. In the afternoon we have Canadian GDP figures and Industrial Production, followed by Income data from the USA. There is no UK data of note today.

Tuesday – In Australia today we have an interest rate decision, and there is the chance of a cut. House Prices and commodity index is also released from down under this morning. UK data is quite light with only Purchasing Managers Index being released at 09:30am. We are data heavy from the US today including Construction Spending, Manufacturing, a FED Speech and vehicle sales.

Wednesday – We’ll start in the UK today where we see Halifax House Prices, Money Supply, Consumer Credit and Mortgage approvals. Over in the EU we see German Inflation data and unemployment measures, EU wide inflation numbers are also released. In the USA we will see employment data, mortgage applications and factory orders.

Thursday – We have Nationwide House Prices and UK PMI data this morning from the UK. In the EU we see Producer Price Index numbers, an Interest Rate decision and a speech by ECB president Mario Draghi. In the USA there is also another speech from the FED.
Friday – Starting in the EU we see German inflation data and EU wide Retail Sales. The main data today though is from the USA where we see Non-Farm Payrolls, which often causes volatility for GBP/USD rates. Staying in the states we also see average earnings and the unemployment rate.

Getting the best exchange rates

You want the best exchange rates, of course you do. That's why you're reading this blog to try and gauge your timing. Take the next step and send us a free enquiry and have a consultation on all the options available to you.It's free, it doesn't obligate you, and you may be surprised how much you can save by using us to get exchange rates that are up to 5% better than offered by banks. Click below to send your free enquiry now, and get a response the same day.

Click here to send me a free enquiry

Why is Pound still high despite UK Recession?

Friday 27th April 2012
Good morning. It's been a very busy week in the currency markets. In today's post I will look at the Pound/Euro forecast and predictions for exchange rates in a week that saw the UK heading back into recession. Read my analysis of the effect EU political instability could have on exchange rates, and why the Pound is still strong despite gloomy growth figures showing we are in recession. If you need the best exchange rates, send me a free enquiry for a detailed consultation on the options available to you.

UK back in recession

The UK economy has returned to recession, after shrinking by 0.2% in the first three months of 2012. The technical definition of a recession is defined as two consecutive quarters of contraction. The economy shrank by 0.3% in the fourth quarter of 2011 so the latest figures confirm we are back in recession – just!

The numbers were a surprise to analysts including myself, as most of us expected slight growth of around 0.3%. When the actual figures were released earlier this week, the Pound tumbled across the board, however the fall in rates was very short lived, and have since rebounded.

So despite the fact the figures were slightly worse than many expected, and the fact that the UK is now technically back in recession should not detract from the underlying reality, which is very much as predicted; The UK economy has been bumping along the bottom for more than a year and is still struggling to gain momentum.

So why is the Pound still strong?

This week’s GDP figure is only an early estimate, and is subject to at least two further revisions in the coming months. This is part of the reason why it didn’t have much of an impact. The numbers are compiled using 40% of the data gathered for later revisions, and as it’s only fractions of a percent, the markets haven’t reacted too much to it. This has surprised me.

Another reason the Pound is still strong is the fact all other general economic figures of late have been quite good. This was also underlined this week when UK consumer confidence hit a 9 month high last month. 26% of respondents asked by the Nationwide Building society said now would be a good time to make major purchases, which was the highest level for 10 months. Consumer confidence is a good barometer of overall economic optimism.

Finally, EU political instability has kept the Euro weak and rates supported…

EU political uncertainty keeps GBP/EUR rates above €1.22

One of the main drivers of exchange rates is economic information, of which we have lots to choose from in the last few years! Often overlooked is political instability, but it can have an equal or greater effect. This week we have seen Dutch Prime Minister Mark Rutte tender his government's resignation, paving the way for early elections.

His cabinet was plunged into crisis when Geert Wilders' Freedom Party (PVV) quit talks aimed at slicing 16bn euros (£13.1bn) from the budget. Mr Wilders refused to accept austerity demands to bring the budget deficit in line with EU rules. His party was not part of the coalition but supported the minority government. The crisis has also fuelled fears that the Netherlands might lose its triple A credit-rating.

We have also seen some surprise events unfold in the French elections. It was thought that Sarkozy would easily win a majority, but results in the first round of voting suggest otherwise.

So why does political instability in Holland and France affect exchange rates? It’s all to do with investor confidence. A new government in Holland or France may not be as sympathetic to austerity measures as the current ones. Indeed this is likely to be quite a vote winner amongst very low popularity of cuts needed. So with uncertainty surrounding the political future of some major EU economies, it casts doubt on the whole EU bailout plan.

Thus, the instability has weakened the Euro, and kept rates around the €1.22 level despite the UK falling back into recession.

Pound hits 7 month high vs. US Dollar

Sterling rose to its highest level in over 7 months against the US Dollar yesterday, keeping rates well above the $1.60 level, and briefly touching $1.62. It’s quite a surprise to see rates remaining strongly supported, despite the fact the UK is back in recession. So what caused rates to continue to climb? GBP/USD rates have been pushed up by weakness in the US Dollar, as policymakers in the states kept the door open for more monetary easing.

Federal Reserve Chairman Ben Bernanke said earlier this week that U.S. monetary policy was "more or less in the right place" even though the central bank would not hesitate to launch another round of bond purchases if the economy were to weaken. So despite the Pound being in Limbo due to the latest growth figures, weakness in the US Dollar caused by the fact more QE is possible, has made it cheaper to purchase.

Moving forwards, the forecast for GBP/USD rates will depend on events in the Eurozone. With debt problems and political instability giving continued uncertainty to the global economy, and further surprises could cause the Dollar to gain strength due to its safe haven status. When there is uncertainty, investors flock to safe haven currencies like the US Dollar, which can in turn make it more expensive to purchase. Failing any safe haven buying, I think GBP/USD rates will now remain above $1.60

Getting the best exchange rates.

If you need to buy or sell foreign currency at the best exchange rate, then take advantage of a free consultation with an expert. It's free to make an enquiry, and we can let you know all your options to help you make an informed decision on when to convert your funds, and what type of contract is best for you.

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.

Have a great weekend. On Monday morning I'll do my usual weekly retrospective and forecasts.

Click here to send me a free enquiry

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

Monday 23rd April 2012
Good morning, I hope everyone had a lovely weekend. As usual for a Monday morning, today I will look back over last weeks events that pushed Sterling up to new highs against the Euro and Dollar. I will also analyse the exchange rate forecast for Euros and Dollars, in addition to what economic data is out this week that I think could affect exchange rates.

In this week’s Report:

• Pound Surges through €1.22 / $1.60
• Positive BoE report and unemployment strengthen Pound
• UK GDP figures this week key to future rate movements
• Round up of the week’s other data that may affect rates

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

Sterling vs. Euro;

Euro purchasers celebrated last week after Sterling extended gains against a beleaguered Euro as investors scaled back expectations of further stimulus from the Bank of England, putting the Pound on course to allow it to rise against the euro to levels not reached since the middle of 2010.













Pound gains very well against Euro

The pound rose to its highest weekly average in over 3 years against the single currency and a five-month high against the U.S. dollar, which helped it to climb to a 20-month peak on a trade-weighted basket of currencies, data from the Bank of England showed.

Minutes from the BOE's policy meeting released on Wednesday showed the committee voted 8-1 against further stimulus, with one policymaker Adam Posen who had consistently voted for more stimulus moving away from a dovish to a more hawkish stance.


How is the debt crisis in Europe affecting things

Analysts and Traders commented that while sterling was potentially poised for more gains, a lot would depend on how the euro zone debt crisis panned out. The Spanish 10 Year bond auction went through smoothly but with limited success and borrowing costs have been rising as investors remain sceptical about whether other countries in the Eurozone can solve their fiscal problems without seeking more aid from agencies like the IMF. While a steady erosion of confidence in the euro zone supports sterling against the euro, the pounds gains can be limited to a certain extent, given the UK's large exposure to the crisis-hit euro zone.

What about further UK data? How could that affect exchange rates?

Furthermore the UK's labour market is at best sluggish at the moment, domestic demand patchy and the economic recovery uneven. So while the signs of a slight recovery lessen the need for further stimulus, a rapid deterioration in the euro zone crisis could actually worsen the UK's outlook and drive the BOE towards quantitative easing again.

On Thursday, BoE's Posen said he is worried that underlying inflation pressures have not eased in recent months and added if last month's pick-up in inflation persists, the central bank would need to rethink policy.

Whilst the Pound’s performance against the Euro can be welcomed by those people in the UK buying a property abroad, a degree of care should be taken. It is certainly true that Sterling has benefited from negative Euro sentiment recently, however the Pound shifted this week on reasonably indifferent news. The news that further QE is unlikely for the time being, acted merely as a trigger to push the cross in Sterling’s favour, although it certainly wasn’t a green light to indicate that all is well within the UK economy.

Next week sees a host of data releases including preliminary GDP figures that could potentially push Sterling back and undo that gains that we have seen this week.

In order to ensure that you remain in control of your currency purchases in order to capitalise on positive market movement and protect yourself in the event of the market moving against you, you should speak to us about our exchange rates.

Click here to send me a free rate enquiry now.

Sterling vs. US Dollar;

Last week saw the Pound continue its bullish start to 2012 against the Dollar, with the enticing level of $1.60 tangibly close as a trading level to buy. A string of positive data releases in the UK allowed the pound to flex its muscles throughout the week, with several choppy trading sessions representing fantastic buying opportunities as well as a few selling opportunities for those who got their timing right.













Many people had wondered whether the surge in rates would continue in the back drop of an improving US economy, thinking, and not illogically, that the Dollar would strengthen with economic growth. Perhaps however, US growth is exactly what is supporting the Pound in its rise against the Dollar?

Regular readers of this report will be keenly aware of the phrase ‘safe haven currency’. The US Dollar has benefited from this throughout the global recession, with investors seeking low risk investments where their money would at least be safe, even if it wouldn’t grow.

Risk sentiment drives investment away from the US Dollar

With the US economy still the largest in the world people ploughed funds into the Dollar through cash and low yield bonds to see out the storm and subsequently the Dollar strengthened massively; remember the 1.36 ‘s back in 2009? Indeed even through the mildly positive 2011 we entered this New Year with the pound struggling in the low 1.50’s with the real changes seen amid the positivity in the US economy in 2012. Droves of previously risk averse investors have sold their bonds and got out of cash and back in the hunt for yield, unsurprising then that the Dollar is now testing levels in the early 1.60’s.

So, great news then if you are looking to buy Dollars. As always though, in the most volatile markets in the world a cautionary note should be heeded. Next week sees the official GDP figures released for the UK in Q1 2012.

Have we all got ahead of ourselves? Will the OECD’s prediction of a second UK recession come true or has the UK Chamber of Commerce correctly predicted growth, however small, in the UK last quarter? Wednesday could be a key day to see whether the pound surge kicks on and continues these great buying opportunities but may still prove a sting in the tail for those looking to squeeze that little bit more out of the market.

If you are looking to buy Dollars, now is obviously a great time to talk to us given that it went to a 5 month high on Friday.

Click here to send me a free rate enquiry now

Weekly Economic Data that may affect exchange rates

Monday – UK Nationwide House Prices are released today, which reflect the health of this sector and is a barometer of overall economic activity. In the Eurozone, inflation data from Germany will be closely watched as it could affect EU interest rates in the future. Elsewhere the only data of note is Producer Price Index info from Australia, which is an inflationary measure.

Tuesday – Today the only UK data is Public Sector net borrowing, released at 09:30am. EU Industrial New Orders are released at 10am, along with some further EU inflation data. Across the pond we have US Home Sales, Consumer Confidence numbers, and Canadian Retail Sales.

Wednesday – A very important day for Sterling, as we have the latest UK GDP figures. This could move the Pound either way depending on the results showing growth or contraction. This is the most important release of the week. In the USA we have Mortgage Approvals, an Interest Rate decision and a press conference from the FED.

Thursday – Quite a lot from the EU today, including Economic Confidence, Consumer Confidence, Industrial Confidence and Retail Sales for Germany. There is nothing of note from the UK. The USA has some jobless numbers and Home Sales, and in New Zealand we will be privy to their latest interest rate decision.

Friday – We end the week with German Consumer Confidence and a US GDP data. Also in the US is consumption expenditure data and measures of Consumer confidence.

Getting the best exchange rates

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

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

Click here to send me a free enquiry

Why has Pound/Euro surged above €1.22.

Thursday 19th April 2012
Good morning. Well what a day we saw in the currency markets yesterday! The Pound surged higher against all major currencies, breaking €1.22 against the Euro and $1.60 against the US Dollar. So why has the Pound gone up against the Euro? The reason was lower than expected unemployment data and general optimism surrounding the UK economy following the BoE minutes. In today's post I'll look at each event in detail and why it caused Sterling to gain.

UK unemployment much better than expected

UK unemployment has registered its first fall since last spring, according to official figures released yesterday. Unemployment fell by 35,000 to 2.65 million over the 3 months since December, and the Claimant Change was 3600 against a forecast of 7000 - so much much better than the markets had forecast.

The data was released by the Office of National Statistics and presents the number of unemployment people in the UK. There is a tendency to influence the GBP volatility. Generally speaking, a rise in this indicator has negative implications for consumer spending which discourage economic growth, so because it was much lower than had been anticipated, we saw Sterling make significant gains when the actual figures were released. It was the start of a good rally for the Pound, which was compounded when the latest BoE minutes were released...

Bank of England Minutes

Signs more stimulus from the Bank of England is now off the cards. Yesterday morning, minutes from the bank's last policy meeting showed it voted 8-1 against further Quantitative Easing, with one policymaker who had voted for QE several times seemingly changing his stance and not voting for it this time, and another now seeing the decision as "finely balanced".

The results were a big surprise to the currency markets. Most analysts, myself included, expected quite a bit of negativity surrounding the minutes. The fact that they were very positive caused Sterling to push much higher against other currencies.

Pound vs Euro

Sterling pushed through the €1.22 level against the Euro after yesterday mornings news.

When the trading floor opened rates were sat at around €1.2130, but at 09:30am when the data was released, we sat rates shoot upwards, peaking at 1.2231 before settling back at around the €1.22 level.

This is a fresh 19 month high, and if you look at weekly averages over the last few years, we're pretty much at the best exchange rates to buy Euros since the end of 2008 when the financial crisis hit.

General Outlook for Sterling/Euro

With rates so good, many clients will want to fix the exchange rate now while it is favourable. Others may want to wait hoping it will go further up. So what is my view? I think sterling could well strengthen further due to the fact further QE is no longer on the cards. However, this is not a given.

The UK's labour market is at best sluggish, domestic demand patchy and an economic recovery uneven. So while the signs of a slight recovery lessen the need for further stimulus, a rapid deterioration in the euro zone crisis could worsen the UK's outlook and drive the BOE towards easing thus pushing the Pound back down.

What you should do if you need to buy Euros

You could fix a rate now while it's so good. Even if you don't need your funds for some time, for a small deposit you can lock in the current rate for up to 2 years. If you want to gamble on rates continuing to rise, then you could place a 'Stop Loss' order. This is where you place an order to buy your currency should it fall below a pre-agreed level, for example 1.20. In this way you can still take advantage of any gains, but have a safety net and worst case scenario should we see rates start to drop.

If it were me I would want to fix the rate now while it is good, but then I am quite risk averse and not much of a gambler!

Of course each clients situation, needs and attitude to risk will be different, so to discuss the best option for you click here to send me an enquiry, and take advantage of a free consultation where I can run through all your options. Simply leaving it to chance is not a good strategy; chance is not a reliable economic tool.

Today's Data

Unusually for a Thursday there are no UK releases today. In the EU there are consumer confidence measures which in the absence of any other EU or UK data could have a bigger impact than normal. In the USA we have Home Sales data and the Philadelphia Manufacturing Survey.


Getting the best exchange rates

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

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

Click here to send me a free enquiry

Sterling remains near 19 month high

Wednesday 18th April 2012
Good morning. Not an awful lot to report from the Currency Markets, as Sterling exchange rates continue their relative stability and remain fairly range bound. The Pound did however gain against the US Dollar yesterday after data showed UK inflation ticked up as expected in March.

UK Inflation strengthens the Pound

Data released yesterday showed that UK inflation rose to 3.5% last month. This caused the Pound to gain because it makes it more likely that the Bank of England will not inject more stimulus into the economy next month. Previous Quantitative Easing had weakened the Pound.

The next focus for the Pound will be later this morning, when the Bank of England MPC meeting minutes for March are released. This will show how the members voted and what was discussed.

While all nine members of the MPC are expected to have voted to keep rates on hold, the minutes will be scrutinised for any hint on whether policymakers would consider another round of quantitative easing when the current programme ends next month.

More confidence in Europe

There was cautious improvement in sentiment towards the euro zone yesterday, helped by a much more positive German ZEW business survey. Usually good news from Europe would strengthen the Euro, and cause exchange rates to fall.

This didn't' happen however, due to the current global climate meaning good news for Europe is also good news for the Pound, and so the data failed to boost the euro against the pound. Sterling remains around a 19 month high vs the single currency.

Today's Data

Unemployment data is the main UK release today in addition to the BoE minutes. In the EU there are Current Account measures which measure the net flow of funds in and out of the Eurozone, so expect some EUR volatility. Later in the day some inflation measures are released from New Zealand


Getting the best exchange rates

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

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

Click here to send me a free enquiry

Weekly Sterling/Euro forecast & predictions

Monday 16th April 2012
Good morning. Today as is usual for a Monday, I'll take a retrospective look at what happened in the currency markets last week, with a focus on the Pound/Euro exchange rate in addition to the weeks economic data I think will have an effect this week. Will the Pound/Euro rate remain above €1.20?

In this week’s Report:

• Pound remains stable against Euro
• EU Debt problems refuse to go away
• 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 GBP/EUR rate move to a 19 month high of 1.2160, a mid-market price we haven’t seen since September 2010 and was driven by continued negative data coming out of France, Greece and Spain.













Data and events last week in the Eurozone showed that French manufacturing production declined further, only narrowly avoiding a slip into negative territory whilst social unrest continued in Greece as more strikes at the start of the holiday season seemed destined to halt efforts to get the economy moving again.

Spanish 10-year bond yields remained high, prompting investors to move to the safer heaven currencies of the GBP and USD. Also, Spain’s 10-year yield jumped to 5.99% nearing the levels that prompted Greece, Ireland and Portugal to seek bailouts.

Despite the bad news coming from the Eurozone, there seemed to be little effect on the currency markets. The negative news seems to be priced into the market already; as everyone knows it will not be a quick turnaround for the single currency. This has helped the GBP/EUR exchange rate to keep trading above the 1.21 level on interbank.

Furthermore the Pound was supported and has hit a 13 month high against a trade weighted basket of currencies. Sterling has been helped of late by data showing British retail sales rose in March at the fastest pace this year so far. Retail Sales are a good overall barometer of the UK economic as a whole, and so often have quite a big impact on the value of the Pound. The British Retail Consortium said like-for-like retail sales rose by an annual 1.3%, easily beating expectations of a stagnant performance, hopefully holding off fears of any potential recession for the UK economy.

As with the Euro data, the positive data out of the UK didn’t have much effect on rates as the markets wait to see what effects Q1 GDP figures on Wednesday (25/04) next week will have on the markets. The GDP figures will be very important indeed as they will show whether the UK is back in recession or not. Most analysts say that this is the next key indicator of the UK economy.

So will exchange rates remain above €1.20?

So in summary, the market seems to be fairly stable of late, and has been range-bound around the 1.20 and 1.21 levels for a few weeks now. Moving forwards, with forecasts for the exchange rate varying wildly between €1.14 and €1.25 for the next 3-6 months it’s very hard indeed to know what will happen.

It’s very important to note that despite the stability of late, it’s no guarantee rates will stay at this level. Indeed over the course of the last few years we have breached €1.20 several times, only for a sharp downwards correction to follow. Even if you don’t need your currency for some time, there are tools in place to protect you against adverse movement.

With much uncertainty over the issues in Europe, and of course the possible know on effects of this on the UK, the best course of action is a free consultation with us to discuss your options.

Make a free enquiry now - click here

Weekly Economic Data that may affect exchange rates

Monday – We start the week with EU Trade Balance figures, which can quite often affect the value of the Euro. UK wise, there is no data released today. Over in the United States we have Retail Sales at lunchtime, followed by Housing market prices in the afternoon.

Tuesday –This morning we have and RBA policy statement which will be interesting as there is talk of an interest rate cut down under, which could push GBP/AUD higher. In the UK we have a host of data including the Consumer Price Index (Inflation), Retail Sales and House Price Data. In Europe the German ZEW survey (confidence measures) will be released at 10am. In the US there is House Price info released at 13:30, along with industrial production figures at the same time.

Wednesday – Unemployment data is the main UK release today, including the claimant count and average earnings measures. In the EU there are Current Account measures which measure the net flow of funds in and out of the Eurozone, so expect some EUR volatility. Later in the day some inflation measures are released from New Zealand.

Thursday – Unusually for a Thursday there are no UK releases today. In the EU there are consumer confidence measures which in the absence of any other EU or UK data could have a bigger impact than normal. In the USA we have Home Sales data and the Philadelphia Manufacturing Survey.

Friday – We end the week with Retail Sales data being released from the UK, which is a good barometer of the economy as a whole. In the Eurozone there are various confidence measures from Germany, which can have a big impact as its Europe’s largest economy. Other than that the rest of the data is from Canada in the form of various measures of inflation.

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

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

Click here to send me a free enquiry

Pound Euro rate forecast for best exchange rates

Friday 13th April 2012
Good Morning. Since my last post on Tuesday morning, markets have remained fairly flat with little happening to affect exchange rates. Indeed yesterday Sterling surged to a 19-month peak on a trade-weighted basket of currencies, highlighting the strength of the Pound at the moment.

Pound remains around the €1.21 range vs the Euro

Against the Euro, we saw rates climb initially yesterday, hitting a peak of €1.2160, which is pretty much the best we've seen in 20 months. Rates did take a slight dip however as the day progressed, falling back to the €1.21 level by the end of the day.

The main reasons for the climb early on was concerns over Spain's fiscal position, and this weakened the single currency slightly.

UK Exports fall, worrying UK policy makers

The UK's trade deficit widened in February as exports of goods to non-EU countries dropped, figures have shown. The deficit on the trade in goods and services increased to £3.4bn from a revised £2.5bn in January, the Office for National Statistics (ONS) said. Due to this, we saw the GBP/EUR currency pair steadily fall back to where they were earlier in the week.

"The sterling move right now, in their heart of hearts, they (the BoE) would probably prefer not to happen," said Simon Derrick, head of currency research at Bank of New York Mellon.

This is because throughout the financial crisis, policymakers in the UK have been trying to re balance the UK economy through higher exports, especially as domestic demand remains soft amid fiscal tightening and rising unemployment. So, the hope was that increased exports to the EU would help the UK economy grow again.

The reason for the fall is two fold, firstly exports of goods to non-EU countries dropped due to the well publicised debt problems surrounding some EU countries. Also, the general strength of the Pound of late has not helped. While a strong Pound is great for those needing to buy foreign currency, it's bad news for anybody needing to convert foreign currencies into Sterling, as the Pound has now become more expensive to purchase.

So will the Pound now continue to gain against the Euro?

If UK figures continue to surprise to the upside, then it could continue to rise, however we have actually seen rates remain fairly flat, which suggests to me that we may well have already hit the peak with the Pound struggling to make any further substantial gains.

It should also be noted that the UK is exposed to the EU debt crisis, partly because we are a large trading partner, and partly due to the fact our banks are exposed to a very large portion of the debt. For this reason, while the EU problems keep the Euro weak, they also could start to pull the Pound down also.

Pound gains against weaker Dollar

We saw Sterling gain through most of the day against the US Dollar, but again the trend was not to continue. Jobless Claims and annual inflation data was worse than expected, weakening the USD and making it cheaper to purchase and as a result, exchange rates went up.

Later in the day however, we saw much better than expected Trade Balance data, in addition to further inflation data that beat forecast. This was an excellent example of how data that is different than forecast can affect exchange rates.

Economic data releases are always forecast ahead of time, and these forecasts dictate market prices as they are priced in to exchange rates. Therefore when data comes in as forecast, regardless of whether it is good or bad news, it generally doesn't have a huge effect on rates. Yesterday however you can see the effect the worse than expected figures had when exchange rates rose, and then the opposite happened when the surprisingly good Trade balance figures were released.

This is why it is important to keep abreast of upcoming data releases as they often have quite a big impact on exchange rates.

Today's Data

There are quite a few releases today. For the UK we have a host of varying inflation data released at 09:30am. As explained above, if the figures are different to forecast it could affect Sterling exchange rates.

We also have similar inflation data from Germany and the US, so lots that could affect GBP/EUR rates and GBP/USD rates.


Getting the best exchange rates

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

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

Click here to send me a free enquiry

Weekly Sterling/Euro forecast & predictions

Tuesday 10th April 2012
Good morning. I hope everybody enjoyed the Bank Holiday weekend. In today's report I'll take stock of the huge gains seen in GBP/EUR rates last week, and how to take advantage of them even if your requirement is some way off.

In this week’s Report:

• Pound/Euro rates surge into the €1.21’s
• Best way to fix the record Euro rate for the future
• Round up of the week’s data that may affect rates

Sterling vs. Euro;

After the previous week’s constant bad news about the UK economy we would have been led to believe that the national papers had their printers on standby, ready to run off huge spreads about the UK heading back into recession and how we were all doomed.

However last week couldn’t have started any differently with the British Chamber of Commerce contradicting the previous week’s expectations and saying that they felt the first quarter of 2012 had actually been more positive than most thought, and that the UK could avoid a “double-dip” recession.

This view set the tone for the week as we saw manufacturing, construction and service sector PMI all surprise to the upside on 3 consecutive days (Mon-Wed), and even more surprising was the Halifax house price data on Wednesday which showed house prices rising 2.2% in March, up from a drop in February. This really helped to buoy Sterling and forced the rate up from 1.1970 Monday morning to nearly 1.21 by Wednesdays close.













News out of Europe was a little different to say the least. We had confirmation that the Eurozone economy as a whole had shrunk 0.3% in the previous quarter and the data last week didn’t do much to help the Euros prospects for the future. Unemployment rose again to a new high of 10.8% while retail sales fell and German factory orders showed much lower than expected. The Euro fell against most other currencies too (2.3% against the USD) as Eurozone issues were bought back into focus on Wednesday when we saw a disappointing bond auction in Spain and further political rumblings in Greece.

Thursday saw the Pound reach a 2 ½ month high of 1.2137 against the Euro after shrugging off a surprise drop in UK factory output which showed an annual decline of 1.4 present. At lunchtime the Bank of England held the interest rate at 0.5% and didn’t announce any more Quantitative Easing as was expected. The Pound garnered further support as the National Institute of Economic and Social Research (NIESR) released its estimate for UK GDP for the last 3 months and they predicted that the economy grew at 0.1%. Such a small reading would normally be bad news but after the expectations that a technical recession in the UK was just around the corner it may actually be the first sign of further recovery.

Whatever happens over the next few weeks as we move towards the actual GDP reading, the current rate is a perfect time to forward buy currency as I can’t see the rest of the year being anything but uncertain. A Forward purchase is where you can fix a rate of exchange for up to 2 years into the future, but only need to pay a 10% deposit straight away with the balance when you need to complete on the contract.

It is a perfect budgeting tool for property purchases or stage payments, and can also be used by anyone needing to sell currency to avoid potential negative market movements.

Speak to us today about how to make the most of your currency.

Weekly Economic Data that may affect exchange rates

Monday – UK, French, German and Italian Markets are all closed yesterday for Easter. We still some released however including some UK House Prices, EU Investor confidence and Australian Business confidence figures. Trade was very thin and so there was little effect on the markets.

Tuesday – Markets worldwide resume today, and the main data for UK is the BRC Retail Sales, and UK House price data. In Europe we have Industrial Production and German Trade Balance data. Stateside we have wholesale inventories and Consumer Sentiment measures.

Wednesday – Nothing of note from the United Kingdom today. The main data is from the US including Trade Balance Data, The Fed’s budget statement and the Fed’s beige book.

Thursday – Today we see Trade balance figures from the UK. In Europe the main releases are Industrial Production and an ECB monthly bulletin. Again the USA comprises the bulk of data releases today including Jobless Claims, Trade Balance and Inflation data.

Friday – We end the week with UK Producer Price Index & US Consumer Price Index

Getting the best exchange rates

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

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

Click here to send me a free enquiry

Pound Euro rates hit €1.21 and close to 20 month high

Thursday 5th April 2012
Good morning. Why have Pound/Euro rates gone up April 2012? As is often the case, a day can make a big difference in the currency markets, and yesterday was no exception. In my most recent post I pointed out rates had dipped below €1.20, however throughout the day yesterday the GBP/EUR rate surged and touched €1.21 - this is nigh on the best rates we have seen to buy Euros for 20 months. Today I will look at the reasons why.

Pound/Euro rate forecast - surges to €1.21

The Pound gained well throughout trading yesterday, as the chart shows. Much better than forecast UK services sector survey eased UK recession fears, and they also highlighted a contrast with a struggling euro zone economy. As a result we saw Pound/Euro rates push up by 1% - a huge gain for one days trading.

A disappointing auction of Spanish government bonds also weighed on the Euro, as worries grew about Spain's high debt levels and weak economy. Europe's economic prospects look very poor indeed, and debt problems in Spain and Italy mean that the European Central bank will have to do even more to support banks and its weaker economies. This has caused significant Euro weakness and made the Euro cheaper to buy.

ECB leaves interest rates on hold, but press conference dovish

As I forecast yesterday, there was indeed no change to EU interest rates in yesterdays meeting, and also no further quantitative Easing for the UK. As these decisions were as expected it made little to no difference to exchange rates.

What did make a difference however were comments by the ECB president Mario Draghi. He said the euro zone economic outlook is subject to downside risks relating to the debt crisis and commodity prices. This was another reason for GBP/EUR rates climbing as the single currency weakened.

Getting the best exchange rates for Euros

In my opinion it's an excellent time to consider fixing a rate for buying Euros, when you consider it's sitting just below the best rates in 20 months. With UK recession fears on the horizon, it wouldn't take much to knock rates back down, and indeed that's the trend we have seen the last few times rates have been at this level.

We can now offer €1.20+ as a trading level for trades of £20k+, and very close to that for amounts of £1k+. Even if you don't need your Euros now, you can still lock the rate in now with a Forward contract. You simply lodge 10% of the total you want to convert, and we'll guarantee the current rate for up to 2 years. Certainly worth considering if you need Euros in the next 6 to 12 months, as it will protect you against rates dropping back away.

If you want the best Euro exchange rate, click here to find our more about my service.

Pound/US Dollar rates drop away

In contrast to the Euro, the GBP/USD rate fell yesterday. This was due to the U.S. Federal Reserve's March meeting showing only two of the 10 policy-setting committee members saw the case for additional monetary stimulus in the light of an improving economy. This strengthened the US Dollar and made it more expensive to purchase. In turn, the flght towards the Dollar also compounded the Euros weakness.

Today's Data

Today is very important for the Pound, as we have a raft of UK data. Industrial Production, Manufacturing Production and an interest rate decision for the UK. Later in the day we have the NIESR GDP estimate. This is very important as it could signal the UK is heading back into recession. In the Eurozone there are also Industrial production figures from Germany.

Today's GDP figures from the UK could easily wipe out the recent gains in the GBP/EUR rate, so contact us by clicking below to find out more about how we can protect you against adverse exchange rate movements.

Take the first step to making the most of your currency now and click here.

We are now closed for the Easter break from 6pm today until 08:30am Tuesday morning. Live rates will continue in the sidebar. Enjoy your weekend.

If you need to buy or sell foreign currency, send me an enquiry by clicking below and I will call you to discuss your requirements on Tuesday.

Pound dips below €1.20 / $1.60 - Interest Rates today

Wednesday 4th April 2012
Good morning. As I have been warning in recent weeks, the levels of €1.20 on the Euro and $1.60 on the US Dollar may not last forever, and indeed yesterday so the Pound fall slightly against both currencies, however upbeat manufacturing and construction data gave some support which limited the drops, as the better than expected data tempered concerns over a lack of growth in Britain's economy.

ECB Interest Rate decision; how could it affect GBP/EUR exchange rates?

Later today we will see the latest EU Central bank decision on whether they will make any changes to the base rate of interest. My forecast is that no monetary policy changes are expected from the European Central bank today. The same is true of the majority of the experts, with the general consensus that it is highly unlikely for the ECB to change interest rates.

45 minutes after the decision however, we have a press conference with ECB president Mario Draghi. In this he gives his opinions on the current state of the economy, and we often see his comments interpreted as an indication of future interest rate moves. So while I don't expect a rate change in the EU today, I will be closely watching the press conference for any hints of future monetary policy.

Some analysts are saying a hawkish message from the bank wouldn't be a surprise, as they need to get back to concentrating on quelling inflation instead of helping Europe's economy and financial system out of crisis may give the euro a brief boost. This could give the Euro strength and push exchange rates further lower. However some investors were still looking to sell the euro as concerns grew about a fragile outlook for the euro zone and high debt levels in Spain.

So, yet again there are views to both sides and so it's impossible to predict what effect today's ECB decision will have on rates.

Will the Bank of England announce more Quantitative Easing today?

I don't think that the BoE will decide to increase its bond purchase program, despite the fact that two of the MPC members called for it at the last meeting. The minutes from the BoE MPC March meeting revealed that David Miles and Adam Posen voted in favor of extending the bond purchase program. Unless there is a very sudden deterioration in the UK economy, I think the central bank will hold off on further stimulus for now.

"Sterling looks like an okay bet for now as most of the bad news for the UK has been priced in," said Geoffrey Yu, currency strategist at UBS. "But I don't think investors are actively (favouring) sterling and in the next few months we think it is likely to head lower."

Sluggish growth in the midst of a strict fiscal austerity programme has already forced the Bank of England into pumping 325 billion pounds of stimulus in the shape of quantitative easing into the economy. Other data from the service sector due this morning will be closely scrutinised for UK growth prospects and could have more of a lasting impact on the pound.

Today's Data

Staring in Australia again today, we see some Trade Balance figures that could affect GBP/AUD rates. In the UK there are PMI figures released which as mentioned above could have an impact on the Pound. Of more importance will be the latest announcement on any Quantitative Easing. The EU also has an interest rate decision today, followed by a press conference. This often causes more volatility than the decision itself, so we will be watching it closely.

Getting the best exchange rates

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

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

Click here to send me a free enquiry

Weekly GBP/EUR forecast, and the weeks data

Monday 2nd April 2012
Good morning. As always for a Monday morning, today I'll take a detailed look at Pound/Euro rate movements over the last week, forecasts for exchange rates in the coming months, and how economic data releases this week may affect exchange rates.

In this week’s Report:

• UK Could be heading back into recession
• EU debt crisis keeps GBP/EUR supported
• 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;

It was an interesting week for Sterling/Euro, in which we saw a raft of very poor UK data releases, but despite this, rates remained relatively stable and within the €1.19 to €1.20 range we have seen over the last few weeks. In this week’s GBP/EUR report we’ll take a look at the UK economy and why the Pound remains supported against the beleaguered single currency.

In a week in which the UK was bathed in unbroken sunshine, I’m afraid the sun was not shining on the UK economy. We had a raft of fairly alarming data releases suggesting the recovery in the UK is stalling.

Early last week saw Bank of England policymaker David Miles say that growth in the economy had effectively stalled, with growth rates near zero over the last six months. This keeps alive the slim chance of another round of quantitative easing, which usually weakens the Pound. The recent BoE minutes showed 2 members of the Bank of England’s rate setting committee voted for further stimulus, so there is an outside chance more QE could be announced soon.

This was followed on Wednesday by revised figures showing 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. This was worse than the markets had been expecting and increases the chance of the UK heading back into recession. (2 consecutive quarters of negative growth is the technical definition of a recession.)With negative growth in the last quarter of 2012, the fear is that if we also see negative growth for the first three months of 2012, we will be in a double dip recession which would likely weaken the Pound.

These fears were supported on Thursday, and the downward revision was soon forgotten when the Organisation for Economic Co-operation and Development (OECD) has calculated that the UK economy has indeed contracted in the first three months of this year.

While this was just an estimate, it does cause concern as it came just 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.

So, with all the doom and gloom, poor growth figures and general pessimism surrounding the UK economy, you would usually expect the Pound to weaken against other currencies. In fact we saw the Pound remain supported against the Euro at just below the €1.20 level. So why was this?

Part of this was due to news that France's GDF Suez offered £6 billion to buy UK energy company International Power. This strengthened the Pound due to the possibility it could prompt robust demand for sterling, giving the Pound some strength.

This was only part of the reason however, as having a biggest impact on the fact GBP/EUR rates didn’t fall is the EU debt crisis. Despite the concerns surrounding the UK, they pale into insignificance when compared to Europe’s problems. Spanish government bond yields rose yet again last week, while Italian credit default swaps also moved higher, reflecting investor worries that the EU debt crisis is on-going and that Greece may need further funds.


Although the actions by European policy makers helped stabilize the financial markets in the short term, the actions have been seen by many as simply putting off the inevitable, the best analogy being simply “kicking the can down the road” and this is what is keeping the Euro weak and GBP/EUR rates supported.

If you are worried about how the EU debt crisis could affect your currency purchase, you can:

Download our free ‘Future of the Euro’ analysis for free here.

Moving forwards the forecast for GBP/EUR is impossible to read. It’s being pulled down by very weak UK data, but being supported due to the debt crisis. If you need to buy or sell Euros you should have a free consultation with us on the possible outcomes, and tools you can use to protect yourself against adverse exchange rates movements.

Click here to send me a free enquiry now.

Weekly Economic Data that may affect exchange rates









Monday – There is no UK data released today. Of note in the EU however are some inflation numbers and unemployment figures. Stateside we will see 3pm releases including Construction data and manufacturing production.

Tuesday – Some interesting releases from Australia today including an Interest Rate decision, Retail Sales and the RBA policy statement. Closer to home we will see UK Construction data and the BRC Shop Price Index. The EU has further inflation numbers to follow yesterdays.

Wednesday – Staring in Australia again today, we see some Trade Balance figures that could affect GBP/AUD rates. In the UK there are PMI figures released, but of more importance will be the latest announcement on any Quantitative Easing. The EU also has an interest rate decision today, followed by a press conference. This often causes more volatility than the decision itself, so we will be watching it closely.

Thursday – Today is very important for the Pound, as we have a raft of UK data. Industrial Production, Manufacturing Production and an interest rate decision for the UK. Later in the day we have the NIESR GDP estimate. This is very important as it could signal the UK is heading back into recession. In the Eurozone there are also Industrial production figures from Germany.

Friday – EU and UK markets are closed for Good Friday. We do have some data from the states however – Unemployment, Non-Farm Payrolls & Consumer Credit.

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.