Wednesday 31st July 2013
Good afternoon. Sterling has not had a very good run in the last few weeks, and exchange rates have continued to fall since my last post. This is a bit of a surprise, as the most recent economic figures for the UK have actually been pretty good. It’s all down to speculation on what the Bank of England will do with interest rates, and in today’s report I will explain why the Pound has been falling against the Euro to the lowest rate since February. In today’s post:- Why the Pound has fallen against the Euro
- How will the Bank of England move forwards?
- What data releases could affect rates in the next week?
- Find out how good our exchange rates are.
Why the Pound has fallen against the Euro? The Pound has fallen to its lowest levels since February, and at the time of writing GBP/EUR rates sit at 1.1425. Just a few months ago rates were approaching 1.20. In some respects it’s quite a surprise the Pound has fallen as there have been some decent economic numbers out of the UK. Let’s take a look at these in more detail… 
Above shows the decline in GBP/EUR rates over the last 3 months. Last week we saw the latest UK GDP figures. These showed that the UK economy is "on the mend" after figures showed it grew by 0.6% in the three months to June. The latest growth estimate implies that the economy has now recouped almost half of its total 7.2% contraction during the 2008-09 recession, with output remaining 3.3% below its pre-recession peak. Great, so good growth means a strong Pound, right? Not necessarily, and this hasn't been the case this week. The growth figure was in line with market expectations, and share prices on the London Stock Exchange did not react to the news. However, the pound did drop on the currency markets. This was partly due to some market participants believing the data may support further monetary intervention by the Bank of England. Mostly though, the numbers gave little reason to buy the Pound. Some thought the figure would be above 0.6% and because the numbers weren’t a surprise, Sterling lost value. This trend has continued with the Pound falling most days since, mainly due to speculation on what the Bank of England will do to keep growth going.Are you buying or selling Euros? Worried about rates moving against you? Looking for the very best exchange rates? Click here to send me a free no obligation enquiry now. How will the Bank of England move forwards?
At the most recent bank of England meeting all 9 members voted against more Quantitative Easing. This indicates that in the short term at least, there will not be any further money pumped in to the economy. Again you would think this would strengthen the Pound, but you have to look at what other tools are left in the box now QE is off the table. The tool kit is very thin to say the least! Another good explanation for the drop in rates is speculation the Bank of England are going to announce tomorrow (Thursday) some "guidance" on the future of interest rates; specifically, that it will set out a framework to keep rates at near-zero levels for up to 4 years. So, investors are dumping the Pound ahead of this. Keeping rates at near zero is all they can do. 
This would mean little return for anyone holding Sterling, and so despite better economic figures, the Pound has fallen as a result, and could well continue to do so. At 12pm tomorrow we will see the latest decision from the BoE on interest rates and QE. While I don’t expect any change for either, watch for any accompanying statement from the governor that may dictate future moves, as this could impact on the value of the Pound. In 2 weeks’ time we will see the minutes from tomorrow’s meeting to see how the 9 members voted, and if all 9 are still against QE. Click here to get a free quote on exchange rates. What data releases could affect rates in the next week? Thursday 1st August – The BoE and ECB both announce their interest rate decision. There are also some inflation numbers from the Eurozone. IN the USA we have jobless numbers and inflation data. Friday 2nd – We will see UK House prices today, which are a good barometer of overall economic activity. Most data today however is from the USA – Non Farm Payrolls, Earnings and Unemployment data. Monday 5th – Lots of numbers from the Eurozone today, mostly comprising inflation, but also Retail Sales and investor confidence measures. The UK releases its Retail Sales numbers. Tuesday 6th – Today is busy in the UK, with Industrial Production and Manufacturing numbers being release, in addition to Trade Balance numbers. At 2pm we have a GDP estimate, which could well move the Pound. Wednesday 7th – It’s the Eurozone’s turn for Import and Export numbers today. The only UK data of note is House Price data. And the Bank of England inflation report. To find out how data releases could affect the currency you need to buy or sell, click here for a free consultation. Find out how good our exchange rates are. - Are you buying Euros?
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- Looking for the best exchange rates?
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Tuesday 23rd July 2013 Good afternoon. It’s very quiet in the currency markets at the moment, with the media hype currently focusing on the Royal baby and a lack of any significant economic data releases. The Royal baby news had the same impact on the markets as the announcement that Peter Andre and partner are expecting – none whatsoever! So in today’s report I will have a look at the most recent UK news that has helped Sterling, and a look at what other releases we have this week that might affect the currency markets. In today’s post: - UK Recovery set to gather pace in 2014
- Government borrowing falls helping the Pound
- UK Growth figures released this Thursday
- How to get the best exchange rates
UK Recovery set to gather pace in 2014 
The UK's recovery will gather pace into next year, as exports and business investment help to boost the economy, Ernst & Young's Item Club has predicted. The forecasting group predicted that UK economic growth would be 1.1% this year, rising to 2.2% next year and levelling out at about 2.5% thereafter. These are fairly positive numbers and will do no harm to the Pound, however they also acknowledged that growth currently remains reliant on consumer spending and the housing recovery. Spending all relies on confidence, and the good economic news of late has bolstered this, and the good weather has also boosted retail sales recently, all of which has given the Pound a push. "With consumer confidence returning and the government's initiatives to stimulate the housing market bearing fruit, consumers are switching their attention back from saving to spending," the report noted. Elsewhere in America there is the risk of possible market reaction to the end of the Federal Reserve's monetary stimulus programme. This could strengthen the US Dollar and push rates down below the $1.50 mark again. Also, in China there is the risk of an abrupt slowdown in its economy. This would weaken the antipodean currencies such as the Australian Dollar, which could give GBP/AUD rates a lift. The other impact of a slowdown in China could be a strengthening of the Pound. This is because a successful re-balancing in China is expected to help the UK reduce its trade deficit in two ways - through more Chinese demand for UK exports of consumer goods, and less Chinese competition for the UK's imports of raw materials used in the construction industry. All in all the Pound has risen nicely since last week, however in the last few days has been very flat indeed. There have been no significant releases of note, so for the time being Pound/Euro remains range bound between 1.16 and 1.1650. Find out more about our exchange rates. Government borrowing falls helping the Pound Figures released this week shows that government borrowing fell in 2012-13. Public sector net borrowing was revised down to £116.5bn. It means that total borrowing actually fell, by £2.1bn, from the year before, contrary to a previous estimate in May. The Office for Budget Responsibility (OBR) has forecast that total borrowing in the current fiscal year, excluding the effect of financial interventions and the deal with the Bank of England, will be about £120bn, or 7.5% of GDP. The lower figures also lent some support to the Pound. UK Growth figures released this Thursday 
The main data release this week will be Thursdays GDP numbers. The Gross Domestic Product released by the National Statistics is a measure of the total value of all goods and services produced by the UK. The GDP is considered as a broad measure of the UK economic activity. I expect the Quarterly figure to show growth of 0.6%, and the year on year figure to show growth of 1.4%. These forecasts will already have been priced in to where exchange rates stand, so if the actual number is higher than this, expect Sterling to make gains. If the number is lower, expect a drop in exchange rates. Other than some EU inflation numbers tomorrow, the GDP numbers are the most important release of the week in terms of what will affect exchange rates. How to get the best exchange rates 
If you are reading my blog, the likelihood is that you are looking to achieve the best exchange rates to convert one currency to another. The rates I can source are up to 5% better than the banks can offer, so why not make a free enquiry today to see how much you can save. In addition to better rates, we have various contract types such as Stop Loss and Limit orders, and Forward contracts. These types of contracts can protect you against exchange rates moving against you, and help you achieve the best possible rate within your time frame. To find out more about my services, including how the above contracts work, send me a free enquiry today. It costs nothing and carries no obligation, and simply means you can have a free consultation on your particular currency requirement. In this way you can make an informed choice about what type of contract to take and when to fix your rate. This, coupled with our commercial exchange rates could save you thousands of pounds. Click here to make a free no obligation enquiry now.
Wednesday 17th July 2013 Good afternoon. It’s been an interesting week for Sterling exchange rates, with GBP/EUR falling to its lowest in more than 3 months, before recovering on positive news from the Bank of England this morning. In today’s post I’ll take a look at what has caused the swings in exchange rates. Pound hits 3 month low vs. Euro 
Earlier this week, poor inflation figures pushed Sterling lower, dropping into the €1.14’s against the Euro, which is its lowest in more than 3 months. The reason the Pound weakened is that the economic numbers lent support to the case for more monetary stimulus from the Bank of England. It has been speculated for some time now, that the new BoE governor would pursue aggressive Quantitative Easing, which would weaken the Pound significantly. This view was not to last however, as today we saw the latest minutes from the Bank of England’s (BoE) Monetary Policy Committee (MPC) meeting. Bank of England’s MPC vote unanimously to hold QE and interest rates, causing a surge in exchange rates. 
This morning at 09:30am, the minutes to the decision a few weeks ago to hold off QE were released. These showed that the Bank of England had voted unanimously against increasing its quantitative easing programme at its latest meeting, sending the Pound higher. 
As you can see from the clear spike in today’s GBP/EUR chart, the news immediately sent Sterling over a point higher against the Euro, lifting the Pound from its recent slump. Looking for the best exchange rates? Get a quote now. UK Unemployment Also sending the Pound higher was the news that UK unemployment fell by 57,000 to 2.51 million in the three months to May, the Office for National Statistics said. Ministers said it showed that recovery was taking hold, but critics said the human costs were still too high. It seems that even with low growth rates, the UK economy can create jobs. Since this time last year about 300,000 more people are in work. And that continues to surprise economists. In past economic downturns. Unemployment has risen much higher - and fallen very slowly. The better figures, combined with the BoE vote, has helped the Pound recover and exchange rates have risen as a result. Summary Things can turn around very quickly in the currency markets, and this is what we have seen today. Doom and gloom and a 3 month low has turned into economic optimism and a strengthening Pound, all within 24 hours. If you are looking for the best exchange rates to buy or sell a foreign currency, send me a free enquiry today. I can discuss your requirements, explain what is moving exchange rates, and help you to decide when to fix your rate. When that time comes, I can help you achieve rates of exchange that can be up to 5% better than available at banks and other financial institutions. When converting a large sum, using my services can save you thousands of pounds. How much could you save? Send me an enquiry now to find out.
Friday 12th July 2013 Good morning readers. Apologies for the blog being quiet for the last fortnight; I’m just back from a few weeks in Fuerteventura, and so today I will take stock of how the major currency pairs have performed over the last few weeks, and take a view on what the forecast is for Pound/Euro rates along with other major currencies. In addition to looking at the outlook for Sterling exchange rates, I’ll list the main data releases for the next week that may affect exchange rates. In this week’s report: - UK Interest Rates to remain on hold for foreseeable future
- Will Pound/Euro rates rise or fall this summer?
- Pound/Dollar rates drop below $1.50 before recovering
- Central Banks likely to continue Quantitative Easing
- Pound held back despite better economic data
How has Sterling performed, and where are GBP/EUR rates headed? In the last few weeks, the pound had fallen sharply against other currencies after the Bank of England warned that markets were wrong to assume that it would start raising interest rates soon. The fall came just over a week ago when the Bank of England held interest rates at 0.5% and kept its quantitative easing programme (QE) unchanged, which was expected. The decisions were made at the first meeting of the Bank's Monetary Policy Committee since Mark Carney took over as governor from Sir Mervyn King. Next Wednesday we’ll see how the members voted, and whether Carney followed King on voting to increase its asset purchasing programme. The MPC said that the recovery "remains weak by historical standards and a degree of slack is expected to persist for some time". 
With interest rates expected to remain low for longer and the chance of more monetary stimulus, the pound became less attractive on currency markets, sending sterling lower against other currencies and pulling rates down. The pound also fell sharply against the euro, but has now recovered somewhat after the European Central Bank committed to maintaining its interest rates at or below their current level for an "extended period of time", sending the euro lower against all currencies. Releasing a statement alongside the decision is new; Mervyn King didn’t used to do that. IN doing so despite there being no change in policy is significant, as it suggests that further quantitative easing is likely and interest rates will remain low for the foreseeable future. This will keep the Pound weak. Many of my clients are expecting rates to rise, and if you take the recent improvement in economic data from the UK alone, I would agree. However the markets are more complex than that. Sterling is being held back global investors, as the view is that the British currency will continue to offer very little return of interest. Couple this with the threat of more QE along with low interest rates, and I would expect rates to fall in the next 3 months, before recovering later in the year. If you need the best exchange rates, click here to send a free enquiry now. Pound/Dollar rates drop below $1.50 before recovering 
The pound didn’t just fall against the Euro – in the last few weeks it fell below $1.49 against the dollar, close to a three-year low, as markets digested the prospect of UK interest rates staying at 0.5%, and the strengthening US economy. The slide began with the Bank of England saying rates could stay flat. 
I write this blog to keep existing and potential clients informed what is moving exchange rates, and to give my view on what may happen in the future. Hopefully the insight I provide can help to make an informed decision on when to fix an exchange rate. We don’t just provide information however – we also provide commercial rates of exchange to private and business clients that are often up to 5% better than the banks. So why not find out how much we could save you? You can click here and have a free consultation on exchange rates, and discuss the options available to you to help you make the most of your currency. Combined with the exchange rates we provide the savings can be enormous. Click here to send me a free no obligation enquiry now. Economic Data releases for the next 7 days 
Every day economic data is released across the world, and is often the most common thing that affects exchange rates. Below I list the main data releases for the coming week that I think could affect exchange rates. For a free consultation on how these released could affect your particular currency requirement, send me a free enquiry now by clicking here. Monday – It’s a very quiet start to the week, with no data of note from the UK or EU. Over in the States, we have Retail Sales which are a good overall barometer of economic activity. In New Zealand we have inflation numbers which could dictate future interest rate movements. Tuesday – In the UK today we have a raft of inflation numbers, Retail Sales, the Bank of England inflation letter and a speech by one of the MPC members, so a few things that could affect the value of Sterling. In the Eurozone, inflation numbers come at 10am followed by Trade Balance numbers. There are also measures of Economic sentiment from Germany. In the USA we have further inflation numbers along with industrial production figures. Wednesday – Today is the most important one for Sterling. Firstly we have the Bank of England minutes showing the voting and discussion for QE. Released at the same time are the latest unemployment figures, so I expect a choppy day for the Pound. There is nothing of note from the EU. In Canada we have an interest rate decision, and in the USA we have figures from the housing and building sectors. Thursday – The only UK data of note today is the latest Retail Sales numbers. In the United States we have unemployment and jobless numbers, along with some manufacturing figures. Friday – We end the week with German Trade Balance Data, UK Public Sector Borrowing and inflation numbers from CanadaHave a free no obligation consultation on exchange rates. Click here.
At the most recent bank of England meeting all 9 members voted against more Quantitative Easing. This indicates that in the short term at least, there will not be any further money pumped in to the economy. Again you would think this would strengthen the Pound, but you have to look at what other tools are left in the box now QE is off the table. 
This would mean little return for anyone holding Sterling, and so despite better economic figures, the Pound has fallen as a result, and could well continue to do so. At 12pm tomorrow we will see the latest decision from the BoE on interest rates and QE. 
