Monday 30th June 2014 
Good afternoon and I hope everyone had a lovely weekend. The Glastonbury festival is now over, and nearly 200,000 revellers will now be suffering the post festival blues. They are not alone, as the currency markets seem to be suffering post Carney blues, with his recent mixed messages over interest rates pulling exchange rates up and down over the last few weeks. The volatility has continued this morning however the current GBP/EUR rate and GBP/USD rates are hovering in their recent familiar positions of around €1.25 and $1.70, around the level they have been for the last week or so. There is still no consensus in UK interest rates, with the BoE governor still giving mixed signals over when rates may rise, and this is reflected in the Pound/Euro rate going up and down around the €1.25 level. Which way will Pound/Euro rates move in 2014?
It depends on UK economic data and what the markets think the data will mean for the timing of a UK interest rate hike. In short, good news will push the Pound higher, worse than expected figures will push it lower. It should be noted that in the last month or so, the GBP/EUR rate has hovered around €1.25 but has failed to break any higher, as the chart below shows: So those holding out hoping for rates to go higher should consider the possibility that they might not. If it becomes less likely interest rates are going up this year, the Pound could drop away. Of course good data could cause it to go higher, but given we’ve seen the rate climb 7% already this year means there may not be much left in this cross to go higher. If you need to buy Euros then you can either fix the rate now while it’s close to a 20 month high. Even if you don’t need your currency for up to 2 years, you can lock in the rate now if you have 10% of the total you want to convert to lodge as a deposit. Alternatively if you are keen to hold out in the hope of a higher rate, a Stop Loss order allows you to do this without leaving yourself open to the risk of rates dropping and ending up with a worse rate than currently available. Click here to find out more about our rates and these types of contracts This week’s economic data releases
As I’ve stated above, it’s economic data that will be driving the markets over the next few weeks and months. Below I’ve listed this week’s figures that I think will affect rates. Of course the way this could affect your currency requirement depends on the currencies you are buying or selling. For a free consultation on my views on which way exchange rates to go, click here to send me a free no obligation enquiry today. Monday 30th June 2014 This morning we had UK mortgage approvals, which while slight better than expected was almost as forecast so this had little effect on exchange rates. We also saw worse than expected German Retail Sales but again this did little to weaken the Euro as the number was close to forecast. Later this afternoon, we have Canadian GDP figures that could affect GBP/CAD rates, and UK Home sales data that could move the Sterling/Dollar rate. Tuesday 1st July 2014 A quiet start to the new month from the UK with Manufacturing PMI figures the only data of note. More likely to affect the Pound/Euro rate will be the German Unemployment data due at around 9am. We also have EU wide inflation data and unemployment. Elsewhere we see US inflation data in the afternoon. Wednesday 2nd July 2014 Nothing major from the UK today, but we do have the latest EU growth figures that could affect GBP/EUR rates. We also have Australian Trade Balance data and a speech from a member of Australia’s central bank, so we could see some volatility in GBP/AUD rates. Over in the USA we have employment data, Factory Orders, and a speech from the FED chairman Janet Yellen. The last time she spoke the Dollar weakened pushing GBP/USD through the $1.70 level, so what she has to say today will be closely watched by the markets. Thursday 3rd July 2014 The only UK data of note today is inflation data due at 09:30am. Of more importance will be events in Europe, as we have a raft of inflation figures, Retail Sales, and the ECB’s latest decision on interest rates. There is also a press conference afterwards at 13:30pm and often the comments made have a big impact on GBP/EUR rates. This will be the biggest mover of rates this week in my opinion. It’s also a busy day in America, with Jobless Claims, Non-Farm Payrolls, Trade Balance data and inflation numbers all likely to change the GBP/USD rate depending on the results. Friday 4th July 2014 US Markets are closed for Independence Day, and it’s quiet elsewhere with German Factory Orders the only data of note. If you're looking for the best exchange rates, click here for a free quote.
Tuesday 24th June 2014 The Pound has fallen against other currencies this morning after the Bank of England chief Mark Carney was quizzed by MP’s over their recent inflation report and comments on interest rates. When being quizzed this morning he cast doubts on when interest rates may rise. In recent weeks he made comments that the market took as a sign rates would be on the way up later this year, which gave the Pound some strength and pushed exchange rates up to multi-year highs. So what did he say and why has the Pound fallen?
The exact timing of a hike is now in doubt however. He said that any increases in interest rates would be driven by economic data, and that the most important aspect of the guidance they’re giving is that any increases in the rate when they come, will be limited and gradual. He also said that the Pound’s strength could be a worry. “On the export side where the data is a bit choppy ... there are still reasonable challenges there given the weakness of demand abroad and the strength of sterling, the recent strength of sterling which has not yet been supported by improvements in productivity and competitiveness.” He had previously warned that a strong Pound is not good for exports. One MP accused the governor of being like an unreliable boyfriend, blowing hot and cold in his hints over interest rates, and this is reflected in the up and down volatility of Sterling presently. As you can see from the chart below, the Pound fell after his comments, falling from 1.2530 to 1.2460 against the Euro, and dipping below $1.70 against the Dollar. So it seems the recent highs were a short lived spike and the market has now corrected slightly. Pound/Euro today:So what might happen next with exchange rates? Up or down?
We are now below the key technical levels that Sterling recently broke: €1.25 against the Euro and $1.70 vs the US Dollar. Given today’s comments, it’s likely the market will be very volatile as data releases indicate how the economy is performing, and the markets try to gauge what this means for the Pound. For those converting currency back to Pounds, then the spike today is a slight move in your favour that is worth considering taking advantage of. I think medium to long term the Pound will continue to remain strong. For those with Pounds to convert to another currency, the short term outlook is very hard to predict. Exchange rates are still very attractive, so you could fix a rate now to protect against it dropping further, or place a Stop Loss order to limit any losses should the market drop away, while still being able to take advantage of a recovery. Regardless what your currency requirement is, I can help you with both excellent commercial exchange rates much better than banks and other brokers may offer, in addition to expert market knowledge and a wide range of currency contracts to help you get the most out of your exchange. Click here to send me a free no obligation enquiry and find out how I can help you. (Please note I can only help with bank to bank transfers of amounts of £5k+, we cannot assist with cash or holiday money.)
Thursday 19th June 2014 The currency markets have stabilised somewhat, with Pound/Euro now stuck at €1.25 and failing to be able to break through that resistance level. Pound/Dollar however has risen to a 5 year high of $1.70+ following yesterday’s meeting of the US Federal Reserve (FED). In today’s post I’ll take a look at these 2 currency pairs, and explain how you can take advantage of these excellent rates even if you don’t need to transfer your currency for some time. Sterling/Euro
We saw the Pound hit a 20 month high against the Euro this week of 1.2562, however some poor UK data has now brought the rate back down to 1.25. This was due to UK Retail Sales that were lower than expected. The main reason rates are so good are the rumour UK interest rates are going to go up this year, and the fact the EU have recently cut their interest rate. (Higher interest rates or the rumour of higher rates tend to boost a currency due to the higher return for investors.) This interest rate speculation has now mostly been priced into the market, which is why the current level is now stuck at €1.25. If you need to buy Euros, then consider locking in the rate while it’s so good. It could creep higher of course, but you don’t want to hold out for an inch and risk losing a mile. Sterling/US Dollar
Today rates have risen to their highest since 2009, and the level is now sat comfortable above $1.70. Last night the FED announced a further tapering of their Quantitative Easing programme. Usually you would expect this to strengthen the currency and bring GBP/USD rates down, however it was what was not said that the markets focused on. There was no hint or discussion of interest rates going up any time soon, and they also cut their growth forecasts, resulting in the USD weakening making it cheaper to buy, pushing the exchange rate to the highest in many years. How to take advantage of the current exchange rates
If you need to convert currency, the current levels are very attractive indeed. Many of my clients have been taking advantage of these levels by using a ‘Forward Contract’. This works by fixing today’s rate of exchange for up to 2 years, but you only lodge 10% of the total you want to convert. In this way you can guarantee a rate while protecting yourself against the market dropping away. This helps you to budget effectively, while retaining the majority of your capital. To discuss this type of contract, or to obtain a quote on the currency exchange you need to perform, click below to send me a free no obligation enquiry today. I can provide rates that are up to 5% better than banks or other brokers. Click here to send me a free no obligation enquiry now.
Tuesday 17th June 2014 Good afternoon. The pound dipped slightly this morning, after figures showed that inflation has fallen to 1.5% in May compared with 1.8% in April. The market had been expecting the number to be a little higher, so the immediate effect for Sterling was a dip in rates. As you can see from the chart below however, the dip was not to last, as some poor Economic Sentiment figures from Europe released shortly after brought the GBP/EUR rate comfortably above the €1.25 mark again:
It is the sixth consecutive month that inflation has been below the Bank of England's 2% target, which would generally mean that there is now less call for the Bank of England to raise interest rates. The market has clearly shrugged off the figures, probably because separate figures from the Office for National Statistics showed that UK house prices leapt by 9.9% in the 12 months to April, and a rate hike would help cool the housing bubble slightly. What next for exchange rates?
We are currently at an 18 month high for Pound/Euro, and around a 5 year high for Pound/Dollar. Tomorrow is all about the central banks. At 09:30am we will see the latest minutes from the Bank of England (BoE) showing what was discussed at their recent interest rate meeting. It will be very interesting to see if any members voted for a rate hike. Of more interest will be any accompanying comments that may indicate when the BoE will look to hike interest rates. Later in the day it is the US Federal Reserve’s turn to decide what to do with interest rates, and like the UK any hints they give to future policy could affect the Pound/Dollar cross. Getting the best exchange rates
I can source exchange rates for over 35 international currency pairs, traded in both directions, (for example EUR, USD, DKK, CHF, DKK, CAD, NZD, AUD, SEK, NOK, HUF, TRY, AED, PLN, CZK, SGD, THB, CNH etc). Whether you need to convert Pounds to Euros to buy a property abroad, or convert a foreign currency back to Pounds, I can help save you a significant sum. Get in touch for a free quote to compare with your bank or existing broker, as the rates I source can be up to 5% better. I’m afraid we don’t deal in cash or holiday funds, only bank to bank transfers for transfers of £5000+ Click here to send me a free no obligation enquiry now
Friday 13th June 2014 Good morning. Friday the 13th, unlucky for some, but not those that need to move Pounds to Euros. Sterling has surged higher following a speech by the governor of the Bank of England Mark Carney, in which he has signalled that interest rates may rise this year. I’ll go into a little more detail in a moment, but in a nutshell this has caused Sterling to rise higher, hitting a 20 month high of €1.25 against the Euro, and testing a 5 year high of $1.70 against the US Dollar: Mark Carney hints at interest rate rise
Last night in a keynote speech, Mr Carney said a rate rise "could happen sooner than markets currently expect". He acknowledged there was "already great speculation about the exact timing of the first rate hike" from their record low of 0.5%, adding that the decision was "becoming more balanced". The news immediately caused the Pound to gain, as the rumour of higher interest rates attracts investment into the Pound, giving it strength and causing exchange rates to rise. Will the Pound go up or down against the Euro?
Nobody knows which way the exchange rate will go, but in general the markets move more on rumour than fact. This means that the rumour of higher rates is now getting priced into the market, hence the current excellent buying level for Euros. In my view, from what we know right now it’s likely the Pound will remain strong, and the Euro will remain weak, so we could well see rates go higher. However there are situations that could cause it to fall back away, so you should be aware of these if you need to buy Euros and are holding out for a higher rate. In his speech he also described the perils ahead for the economy. He said he would look to his ‘trusty canoe’ to ‘navigate the most rapid and treacherous waters’. These include: - A housing market which could ‘overheat’
- High levels of household debt and a record current account deficit.
- He warned the UK economy is ‘currently unbalanced internally and externally’, adding this had to be addressed to turn the recovery into a ‘durable expansion’.
- Carney also pointed to ‘old imbalances persisting and new ones emerging.’
So there are lots of warnings that the economic recovery is not guaranteed to continue, and so there is the risk the Pound could drop back away. We also have the Eurozone that is taking significant steps to bolster their economy, and if these measures work the Euro could gain strength pulling rates back down. What should you do if you need to buy or sell foreign currency at the best rates?
Your first step should be a free consultation, which I can provide over the phone with no obligation. I can discuss your particular requirements, explain the various tools you can use to protect against the market moving against you, and provide you a quote to compare with your bank or existing broker. I can provide rates up to 5% better than available elsewhere, on up to 25 different international currencies, and the savings can be considerable. Alastair Archbold
Monday 9th June 2014 Good afternoon. Apologies for the blog being quiet over the last week or so, as have been out of the country. Much has happened in my absence however, with the European Central Bank (ECB) last week announcing a raft of measures aimed at stimulating the EU economy. Today I will cover what they did, and how it has affected the currency markets and exchange rates. Pound/Euro hits 18 month high after ECB cut interest rates
In their announcement last Thursday, the ECB revealed they have cut its benchmark interest rate from 0.25% to 0.15%. They also announced negative interest rates and cheap long-term loans to banks in a bid to boost the economy and encourage banks to lend to businesses rather than hold on to money. The ECB is the first major central bank to introduce negative interest rates and it is a little step into the unknown. The effect for exchange rates is a weaker Euro and the GBP/EUR rate rising to 1.24 which is the highest in 18 months. Why has it weakened the Euro?
It’s due to the lower return for investors. With interest rates now at 0.15%, people are more likely to invest funds in somewhere with a higher return. This means that funds are moved out of the Euro into other currencies, and the lower demand weakens the currency and makes it cheaper to buy, hence the rise in the GBP/EUR rate. Denmark did a similar thing a few years ago with the aim of weakening the Danish Krone, and the negative interest rate helped to stabilise the currency. For the EU there are 2 main benefits. The weaker currency helps to boost exports while making imports more expensive, which is helpful when inflation is too low. The move was quite widely expected, and in my most recent post I predicted they would cut and the GBP/EUR rate would go up. Because it was widely forecast however, it was for the most part priced into exchange rates already which is why the upwards move for GBP/EUR was relatively small. Do you need the best exchange rates?
Pound/Euro and Pound/Dollar are both trading at very good levels. Even if you don’t need your currency for some time, you can lock in the current rates for up to 2 years with a ‘Forward Contract’. You only lodge 10% of the total to be converted, and the remainder you keep until you need your currency. In this way you can guarantee your rate and protect yourself against a downward move in the market. Regardless of which currency you need to buy or sell, I can provide a free consultation over the phone to discuss your requirements, provide you a quote, and explain the options you have available. In this way you can make an informed decision on when to fix your rate. Click here to send a free no obligation enquiry now Alastair Archbold
Good afternoon and I hope everyone had a lovely weekend. The Glastonbury festival is now over, and nearly 200,000 revellers will now be suffering the post festival blues. They are not alone, as the currency markets seem to be suffering post Carney blues, with his recent mixed messages over interest rates pulling exchange rates up and down over the last few weeks. 
As I’ve stated above, it’s economic data that will be driving the markets over the next few weeks and months. 
