Pound/Euro 2 month low: November Forecast

Wednesday 30th October 2013
Good afternoon.  Currency markets remain fairly subdued, with no huge movements in rates over the week. The Pound has fallen a little further against the Euro, but gained slightly against the US Dollar. Today I’ll have a look at what has caused these shifts despite the lack of much economic data.

Pound slides to 2 month low against Euro

Sterling was recently touching €1.20 against the Euro following some good economic numbers, however this trend ended several weeks ago, and since then the rates have been sliding. So what has caused the rate to drop?

The main reason is slightly better optimism surrounding the EU economy, and the fact that analysts are no longer that excited about the UK’s recovery, which is what had been driving the rise in the value of the Pound.

In the summer, a raft of positive economic data had market commentators gushing about how good the economy was. Investors bought the Pound as a result, and this demand drove its value higher, which is when we got close to €1.20 against the Euro. It was the fact that the robust figures were unexpected that drove Sterling higher.

The problem now is that it’s not a surprise any more. A good example was the UK mortgage approval numbers released yesterday. This is usually watched closely as the housing market in general is a good reflection of the overall economy. The numbers were actually slightly better than forecast. However with investors so used to figures much better than they had been expecting, even though the result was better than expected, it was seen as disappointing and so the Pound fell as a result. 


 
This apathy towards the Pound has reduced its value steadily in recent weeks, and rates currently sit in the €1.16’s.

Best rates for 2 months for converting Euros to Pounds

For those that hold Euros and need to convert them into Pounds, this is good news. The rate is now the best it’s been in a few months, so not a bad time to consider taking advantage of the gains. If you need to get the best Euro/Pound rate then click here to send me a free enquiry today. 

I can explain the options available to you, and provide you with a rate to compare with your bank. You may well be very surprised how much of a better rate I can achieve.

So will the Pound keep dropping against the Euro, or bounce back up?
 
This depends on economic data releases in the next few weeks, and of course the way in which investors react to them. This week is quite quiet, but next week we get some more interesting information from the UK, including inflation numbers, a GDP estimate, and the latest BoE decisions on interest rates and monetary stimulus.

It’s impossible to predict which way the rate will go, however in the short term I can’t see any significant recovery for the pound. In the medium to longer term, I think Sterling will edge back towards €1.20, if of course the economy continues to expand at a rate that surprises analysts. The GDP estimate next week will be a good indication of whether this will be the case.

Click here to discuss your currency requirement with me. 

Make sure you’re in a position to get the best exchange rates
  
Regardless whether you are buying a foreign currency with Sterling, or converting currency back to Pounds, the foreign exchange market will have a huge impact on how much you can achieve. In the last month or so alone, converting £150,000.00 to Euros nets you a sum that differs by over €5000.00.

In order to be in the right position to get the best rate, and gauge your timing, you need to have a good currency broker. I have been working in the financial markets for over 10 years, and so have a good knowledge of what can move exchange rates. By having a free consultation with me, you can make an informed choice with regards to when to fix your rate. Combine this aspect with the fact the rates I provide are up to 5% better than the banks, and you can see that by taking 5 minutes to contact me could result in saving you thousands of pounds.

Click here to send me a free no obligation enquiry now. 

I look forward to hearing from you.

Alastair Archbold

What exactly moves exchange rates?

Monday 28th October 2013
Good afternoon. The weather in the South of England has been very unsettled in the last 24 hours to say the least, however in stark contrast, the currency markets have been very stable. 

With a distinct lack of data releases today, exchange rates have really only moved on sentiment, with Pound/Euro remaining between 1.17 and 1.1730, and Pound/Dollar showing slightly more volatility, dropping from 1.62 to 1.6130 throughout the course of the day, as you can see from the charts below. 

Pound/Euro exchange rate:

 








Pound/US Dollar exchange rate:



So what exactly moves the exchange rate?

There are several factors that move exchange rates, but by far the most important are economic data releases, such as Retail Sales, growth numbers & unemployment figures for example. These are already forecast well in advance, and exchange rates will already have priced in the expected results. What moves the rate is when the actual figures differ from expectations. 

For example last week US jobs numbers were forecast to show 182,000 new jobs. In fact only 148,000 were created. As this was worse than markets had expected, it immediately weakened the US Dollar and caused Pound/Dollar rates to rise.

So it’s these sorts of things that could affect your exchange rate, and so if you need to make a currency conversion, it’s important to know what releases are expected.

So as the market is quiet, today I will list below the main data releases scheduled this week that could affect exchange rates. 

Looking for the best exchange rates? Click here.

This week’s market data releases

Tuesday – There are only minor releases for the UK today, including Mortgage approvals and Lending data, all released at 09:30am. In the Eurozone we have German consumer confidence figures, which are closely watched as Germany is the EU’s largest economy. Other than that, all data is from the United States: Retail Sales, Inflation data, and consumer confidence.

Wednesday – Again another quiet day for the UK. Any moves in Sterling/Euro will largely be driven by EU data: Spanish GDP figures & German and EU inflation data. If the numbers are better than forecast, then we may see GBP/EUR drop further. Over in the USA we have some inflation numbers, and a statement by the Federal Reserve, both of which could affect Pound/Dollar.

Thursday – The only UK release today are consumer confidence figures. These are a good overall barometer of the economy, and so might affect the Pounds value. Eurozone data today includes Inflation numbers, and overall EU unemployment data. We also have some unemployment data from the United States, along with US inflation numbers.

Friday – We end the week with manufacturing numbers from the UK, which are expected to come in at 56.5.Any number over 50 indicates growth, so if the actual figure is higher than this, expect some strength in the Pound and a rise in exchange rates. EU markets are closed today, and over in the USA we have some inflation numbers which could dictate how long their QE programme goes on for.

Are you looking for the best exchange rates? 

If you need to buy or sell currency and are looking to achieve the best exchange rates, then why not send me a free enquiry. I can discuss your requirements, explain how the rate could move for or against you, and help you decide when to fix your rate. When the time comes to do this, I can help you achieve rates up to 5% better than banks or other financial institutions, which could save you thousands.

Click here to send me a free enquiry now. I look forward to hearing from you.

Alastair Archbold

Why has the Pound stopped rising against the Euro?

Wednesday 23^rd October 2013

Good afternoon. Sterling remains a little weak against other major currencies, and is in the low €1.17’s against the Euro. This is mainly due to the single currency gaining strength due to more optimism, and effects of the US government shutdown. So what have I got for you in today’s report?

• Bank of England minutes unsurprising
• UK Interest Rates could rise sooner than thought
• Euro gains strength pushing GBP/EUR rates lower
• Spain finally exits recession
• The types of FX contract I offer

Bank of England minutes unsurprising

This morning the latest MPC minutes from the Bank of England (BoE) were released. They showed that the MPC voted unanimously to keep interest rates on hold at 0.5%, and the Quantitative Easing (QE) programme unchanged. This was all as expected and so had no real effect on exchange rates.

What was interesting was the positivity we saw from the BoE. They showed that UK unemployment and economic output are improving at a faster pace than expected, and also that bu0siness and consumer confidence have continued to grow. However, policymakers were divided about how fast productivity would pick up, and by extension, how fast unemployment would fall as the economy recovers.

This is important as they have already indicated interest rates may start to rise once unemployment falls below 7%. It’s currently at 7.7%, so if things keep improving we may see interest rates start to rise as soon as 2014. This is a long way off, but when rates start to rise it should give the Pound some strength.

What’s keeping exchange rates below the €1.20 mark however is Euro strength, and also the fact that it’s not in the UK’s interest to have exchange rates much higher than they are, due to the fact it would make our exports more expensive, so should rates start to rise again, I would not be surprised to see the BoE try to devalue the Pound to keep things in check.

Euro gains strength pushing GBP/EUR rates lower

Another reason for the Pound/Euro rate not forecast to go that much higher is renewed optimism surrounding the EU economy. Things are looking up in the Eurozone, and as a result the Euro has gained strength and become more expensive to buy.

For example, Spain'seconomy has emerged from recession after growing for the first time in more than two years, according to estimates from the Bank of Spain. Spain's economy has been struggling ever since the credit crisis struck in 2008, and has been one of the worst hit by the fallout from the credit crisis. It burst the country's housing bubble, and has needed bailouts to survive after being left holding hundreds of billions of euros in bad debts. Its unemployment rate of more than 26% is one of the highest in Europe.

Also giving the Euro strength is events in the USA. Now that the US debtceiling has been raised, investors that were holding US Dollars due to its safe haven status, have been selling Dollars and moving in to Euros. This has weakened the Pound a little and strengthened the single currency, keeping GBP/EUR rates in check. 

Click here if you are looking for the best exchange rates. 

On the 3 month chart below, you can see how the rate has leveled off in recent weeks. 

 

 The types of FX contract I offer

I write this blog to keep people up to speed with what is happening to exchange rates. You can make a free enquiry with me here to find out more about the service I offer. 

In a nutshell, I can source exchange rates that are up to 5% better than banks can offer, so if you need to buy or sell foreign currency you could save thousands. Click here to make a free enquiry. Below outlines the type of contracts I offer:

Spot Contract

The most common and popular contract. Fix a rate on the phone, settle your currency to use within 2 working days, and we then forward your currency to the account it needs to go to. All at fantastic commercial exchange rates with 0% commission.  

 

Forward Contract

The Forward Contract can help you take advantage of current exchange rates. You can fix the price now for up to 2 years. Within 2 days of fixing your rate, you lodge 10% of the total value of your transaction. You can then pay the remainder, in part or in full, by the end of the contract. This guarantees your rate, protects you against rates dropping, and allows you to budget. Very useful if you are buying overseas and have some time between paying your deposit and settling the balance.

Limit Order

Aiming for a rate higher than the current level? This is for you. With a Limit Order you specify the exchange rate you are hoping to achieve, and your currency will automatically be purchased if the market exceeds this level and you'll get the rate you wanted. This type of contract is particularly useful when the markets are moving in a positive direction for you.

Stop Loss Order

This is the opposite of a Limit Order. You would instruct me to buy if the currency goes down to a pre-determined level. When combined with a Limit Order you can hold out for a better exchange rate and still protect yourself from a sudden fall in the market. This gives you a worst case scenario and a safety net should the market move against you.

Want to find out more?

Click here to send me a free enquiry now.

When you get in touch, ask for Alastair Archbold and quote ref AJA. I can then have a brief chat regarding your requirements, explain the different options you have, and give you a quote so you can see how good our exchange rates are.

I look forward to hearing from you.

Alastair Archbold

Effect of US Debt Ceiling on Exchange Rates

Thursday 17th October 2013
Good afternoon. Markets have reacted to the news that the US has averted hitting it’s debt ceiling, so today’s post is a quick analysis on the effect it has had on exchange rates.

Let’s start at the beginning; what is this debt ceiling that’s been in the news?
 
The US government is forbidden from borrowing more than $16.7 trillion by law, under legislation that dates its way back to World War I. The first debt ceiling was set at just $5bn, but as America has continued to spend more than it earns, it has repeatedly had to raise the debt ceiling nearly 100 times since then. 

The last time it was set was in May, following a suspension of the ceiling during the first few months of 2013. If it had been hit, the government would have to pay $6bn in debt repayments.

Defaulting on debt would be catastrophic, since trillions of dollars in capital flows are backed up by US bonds - a traditional safe haven. This could result in a credit crisis equal or worse to that seen during the financial crisis, so is obviously a nightmare scenario.

Before the agreement, how had it affected exchange rates?

Normal logic dictates that problems for the US would have caused the US Dollar to weaken. However, due to the fact that it’s a safe haven currency, it actually had the opposite effect. 

Due to the uncertainty it generated in global markets, it actually strengthened the Dollar as investors sought the safety of the Dollar, and this caused Pound/Dollar rates to drop, and also Pound/Euro rates as investors sold the Pound and bought the Dollar.

So what has been agreed?
 
The 2 week political crisis came to an end last night as Congress voted through an eleventh-hour deal to re-open the government and avert a devastating debt default.  After 16 days of government shutdown and only 24 hours before the deadline to raise the debt ceiling, both the Senate and House of Representatives voted through a compromise bill.

The shutdown is estimated to have taken a $24 billion (£15 billion) toll on the US economy while the Fitch rating agency to put America on "rating watch negative" ahead of a possible downgrade.

And what has the effect been on exchange rates now the US won’t default?

Once the agreement had been announced, those that had put funds into the US Dollar pulled back out into other currencies. This has caused the Pound/Euro rate and Pound/Dollar rate to rise, as you can see from the charts below.

I hope this has been useful in explaining how these recent events have affected exchange rates.

Do you need to get the best exchange rates? 

I write this blog to keep my existing clients and potential clients up to speed with what is happening to exchange rates. I am a Senior Currency Broker for one of the UK’s leading foreign exchange companies, and I can help you source the very best rates of exchange.

Whether you need to convert Sterling to another currency, or convert I foreign currency back to Pounds, I can help you. My rates are up to 5% better than banks can offer. 

So click here to make a free enquiry with me now to see how much you can save.
 
I look forward to hearing from you.

Alastair Archbold

Pound falls against Euro after poor economic data

Monday 14th October 2013 
Good afternoon all. Well what a difference a week can make! The change in the weather in the UK has been mirrored by a change in the fortunes of the Pound. In Britain we seem to have very quickly entered autumn, and as the leaves started falling, so did the Pound, after a raft of poor economic data. 

This has pulled exchange rates lower and away from the all year highs seen just recently. In today’s report I’ll look at what has happened to cause the fall, and what else may happen with exchange rates in the coming weeks and months: 

• UK Retail Sales drop 
• Industrial and Manufacturing production fall 
• Trade balance in the UK widens. 
• IMF warn world could enter recession again 

Poor economic figures cause the Pound to fall 

It’s only been a little over a week since my last post, and at that time the GBP/EUR rate and the GBP/USD rate were both around the highest we’ve seen all year. Things can change very quickly in the currency markets however, and that’s exactly what we’ve seen. 

In the last week we have seen some poor UK economic numbers. Industrial and Manufacturing production was worse than expected, coupled with lower than forecast Retail Sales. More worrying was the fact the UK’s trade deficit has widened, meaning we’re importing more and exporting less. All of this had the effect of weakening the Pound and bringing exchange rates into the €1.17’s against the Euro, and back to the $1.60 mark against the US Dollar. 



In recent posts I have pointed out that the market seemed to have peaked, and indeed that now seems to have held true. Those that booked their currency on a Forward contract will be pleased at buying at the peak and will have been protected against the drop we have seen. 

If you are buying or selling currency, the market is very volatile at the moment. Simply hoping the rate will move in your direction is no more than a gamble, and could end up costing you dearly. The best strategy is to get in touch and discuss all the options we can offer you. In this way you can have a detailed chat with me regarding what might move the exchange rate, and make an informed decision on what to do. 

Click here to send me a free no obligation enquiry now. 

Is the world about to be plunged back into recession? 

The head of the International Monetary Fund, Christine Lagarde, has warned that a US default could tip the world into recession, saying that a default would result in "massive disruption the world over". 

So what’s happening in the states? The US Treasury will start to run short of funds on Thursday if no agreement is reached for it to raise its debt limit. The president of the World Bank, Jim Yong Kim, has also expressed his concern over the situation. 

He warned that the United States is just "days away from a very dangerous moment" because of the government's borrowing crisis. 

He warned this could be a "disastrous event" for the world. To explain what has been happening, the US government has been in partial shutdown since Congress missed a 1 October deadline to pass a budget, with politicians being unable to agree funding for current spending. 

This has resulted in hundreds of thousands of federal employees being sent home and government offices closing. Republicans refused to approve the new budget unless President Obama agreed to delay or eliminate the funding of the healthcare reform law of 2010. 

On Saturday, Jamie Dimon, boss of the American bank JP Morgan said the possible repercussions did not bear thinking about. "You don't want to know what would happen," he said. "It would ripple through the world economy in a way that you couldn't possibly understand." 

What might this all mean for exchange rates? 

So we’re at a crossroads in terms of the global economic recovery at the moment, and this may well have serious implications for exchange rates. The value of one countries currency against another is usually finely balanced, and uncertainty in the global markets could seriously affect exchange rates. 

If you need to covert one currency to another, perhaps to buy property abroad or maybe you buy or sell goods in a foreign currency, exchange rates can have a big impact on your costs. 

How can you get the best rates and protect against adverse currency movements? 

The first step is to get in touch with me to discuss your options. As a specialist foreign exchange broker, the rates that I can achieve are significantly better than banks can offer, by as much as 5%. So if you need to convert funds then the savings can be considerable. In addition to our great rates, we also have expert market knowledge that can help you decide when to fix your rate. 

This combined with the various range of FX contracts we offer mean that you could save thousands of pounds on your exchange. 

Click here to send me a free enquiry now and find out more.

Pound/Euro & Pound/Dollar best exchange rates

Wednesday 2nd October 2013
Good afternoon. It’s been quite a volatile week in the currency markets so far, with Pound/Euro touching €1.20 on several occasions, before dropping back away as has been the case for a few weeks. Against the US Dollar, the Pound is up following the Federal shutdown. So in today’s report I’ll look at the effects on the Pound/Euro and Pound/Dollar exchange rate.

Pound/Euro

Pound/Euro rates are the best they’ve been all year, and this week touched €1.20 several times. It didn’t manage to break through however, and dropped back each time it tested the high. Today we had news from Italy and the ECB that has pulled rates back in to the mid €1.19’s.

Firstly, The European Central Bank (ECB) has kept its benchmark interest rate on hold at 0.5%. Recent economic data has shown that an economic recovery may be taking hold in the Eurozone. Eurozone factory activity grew for the third month running in September, according to a survey.

The euro also found some support on growing signs Italian Prime Minister Enrico Letta will survive a confidence vote later on Wednesday.

Both of these events gave the Euro back some strength, and pulled GBP/EUR rates down. I don’t personally expect rates to climb significantly higher, due to the fact it wouldn’t be in the UK’s interest to have a high rate. Should the rate climb above €1.20 we may see the Bank of England move to weaken the Pound, as a high rate would not help our recovery due to it making our exports more expensive to the EU.

All in all it’s a great time to be buying Euros, so if you need to do this, send me a free enquiry today to discuss the current rate and find out the rates that we can offer.

Pound/US Dollar

Against the US Dollar rates are also very attractive indeed. This is partly due to Sterling strength, but has also pushed higher due to events in the States. In the U.S., concerns over a partial government shutdown kept the dollar under pressure.

The US government has begun a partial shutdown after the two houses of Congress failed to agree a new budget. The Republican-led House of Representatives insisted on delaying President Barack Obama's healthcare reform - dubbed Obamacare - as a condition for passing a bill.

More than 700,000 federal employees face unpaid leave with no guarantee of back pay once the deadlock is over. You can read more about it here on the BBC site.

It is the first shutdown in 17 years and the dollar fell early on Tuesday. The weakening of the US Dollar has pushed rates up into the $1.62’s as you can see from the chart.

Do you need to buy or sell Dollars? Send me a free enquiry now.

Get in touch to find out more about our exchange rates.

As a specialist foreign exchange broker, the rates that I can achieve are significantly better than banks can offer, by as much as 5%. So if you need to convert funds then the savings can be considerable. In addition to our great rates, we also have expert market knowledge that can help you decide when to fix your rate.

This combined with the various range of FX contracts we offer mean that you could save thousands of pounds on your exchange.

Click here to send me a free enquiry now and find out more.

When you get in touch quote the reference AJA and mention this Blog.

Alastair Archbold