Pound up, Euro weakens, Dollar strengthens - forecast 2014

Tuesday 26th August 2014 
Good morning and welcome back after the long weekend we enjoyed in the UK, despite the dismal weather! The Pound/Euro rate however is anything but dismal, having recovered today when UK markets opened. This is more to do with weakness in the Euro that I shall explain in a moment, in addition to looking at why Pound/Dollar rates dropped. I will also outline what data released we’re looking at this week that could affect exchange rates. 

Sterling/Euro rates up, but not due to the Pound 

Over the weekend there was a meeting with the US and EU central bank chiefs in the United States. There were some interesting comments from the European Central Bank (ECB) president Mario Draghi that has caused the Euro to weaken. 

Unlike the UK, Europe is still struggling to grow and they are facing a problem of very low inflation. Usually you would lower interest rates to combat this, but rates in the EU are already at a low of 0.15% so they can’t cut it any further. So what I expect them to do is look at other stimulus measures, much like the Quantitative Easing we saw in the UK. 

His comments over the weekend hinted at this when he said that they would “use also unconventional instruments to safeguard the firm anchoring of inflation expectations over the medium- to long-term.” Adding that they would “use all the available instruments needed to ensure price stability over the medium term.” 

Markets have taken this as the clearest signal yet that they may indeed have to create money to pump money into the economy. If so this would weaken the Euro, and this has started to get priced into the market and the Euro has weakened off, causing the Pound/Euro rate to recover back towards to €1.26 level.

Do you need to buy Euros, or convert Euros to Sterling? Click here to compare our rates. 

Pound/Dollar rates drop 

Again this was not due to Sterling, it was due to the US Federal Reserve Chair Janet Yellen being very positive about the US economy, their growth and unemployment levels, and the fact they will continue winding up their stimulus program, all of which points to the USA raising interest rates next year. As a result, the Pound/Dollar rate dropped as the US Dollar became more expensive to buy. 

This week’s data releases 

Tuesday 26th August – today has been quiet in terms of economic data, with only US figures of note. We’ve seen good orders higher than expected compounding the strength of the US Dollar. 

Wednesday 27th August – Yet another quiet day, and while there are some minor releases, there is nothing that I think should affect exchange rates. 

Thursday 28th August - It is quiet again in the UK with nothing of interest other than some consumer confidence figures at midnight. In the EU however, Germany (Europe’s largest economy) has a raft of unemployment and inflation data. Over in the United States we have Gross Domestic Product figures, Jobless Claims and Home sales, all of which could affect GBP/USD rates. 

Friday 29th August – The only UK release is a measure of business investment, but with a lack of other UK data this week it may have a larger effect than normal. Elsewhere we have EU inflation and unemployment, Canadian GDP figures, and income and expenditure figures from the USA. 

Are looking to get the best possible exchange rates? 

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Pound rises on MPC vote, but gains likely to be limited

Wednesday 20th August 2014 
The Pound has recovered slightly this morning after 2 members of the Bank of England's Monetary Policy Committee (MPC) voted to raise interest rates in August, the first time in three years that policymakers have done so. In today’s post I’ll explain why this caused Pound/Euro rates to rise, and why I think any gains will be limited and that Euro buyers should consider fixing rates sooner rather than later. I’ll also give my views on the Pound/Dollar forecast. 

Bank of England Split on interest rates 

This morning’s data showing 2 of the 9 members voted for a rate hike shows division within the BoE. It is the first time there has been a split in over 3 years. (Interest rates have been unchanged since March 2009.) It also suggested an early interest rate rise was desirable as a way of anticipating inflationary pressures from wage rises. 

Despite the split vote, it doesn’t really change all that much because yesterday’s inflation figures showed the Bank remained under no immediate pressure to raise interest rates. With inflation well below target and wage growth stagnating, any increase in interest rates at the moment would be premature. It’s for this reason that I think that the GBP/EUR rate will now be settled at around 1.25 or so for the moment and is unlikely we’ll see any more gains. Sterling has actually been in decline of late so this is likely a temporary spike upwards. 

Therefore if you need to buy Euros in the next 3 to 6 months, consider fixing the rate sooner rather than later while it’s still within a few cents of a 2 year high. You can do this by simply lodging 10% of the total you want to convert, and guarantee today’s rates for up to 2 years. 

Click here to find out the Pound/Euro rates I can offer 

Sterling /US Dollar 

We saw this rate increase too today, but gains were limited and short lived. The current rate sits a little above $1.66. Later this after we have the US version of today’s UK BoE release – the FED minutes. Any indications that they discussed easing policy or raising rates would cause the USD to strengthen and become more expensive to buy. 

Exchange rates to buy Dollars were at a 5 year high recently, but has since dropped from $1.72 to $1.66. I personally expect this currency pair to keep dropping as the US economy recovers. Rates closer to $1.60 are likely in 2015. 

Other data this week that might affect exchange rates. 

The remaining data this week is thin on the ground. We have UK Retail Sales tomorrow morning which are a good indicator of economic activity. I expect a rise of 0.4% and as usual if the number is lower than this, Sterling will likely drop in value. 

We have US Jobless numbers tomorrow, along with some EU inflation numbers. Friday is very quiet, and markets are closed on Monday for Bank Holiday. 

What does this mean for your currency requirement? 

The currency markets are very volatile, and when converting large sums even a small movement in the rate can end up costing you thousands. The service I provide is twofold. Firstly you can have a free no obligation chat with me about the exchange rate, and I can explain what is moving the rate and discuss which way it could move in the future. In this way you can make an informed choice on when to fix your exchange rate. 

When the time comes to fix a rate, I can provide commercial exchange rates that are significantly better than banks offer, by as much as 5%. This means that I can save you thousands of Pounds when converting one currency to another. 

If you need to convert funds and would like to discuss what is happening with rates, and obtain a quote to compare with your bank to see how much you can save, click below to send me a free no obligation enquiry today. It is free to make an enquiry and does not obligate you in any way. 

Click here to make an enquiry today and see how much you could save.

Pound falls further after poor inflation numbers

Tuesday 19th August 2014 
The Pound has fallen further today, as this morning’s UK inflation figures were worse than expected. Inflation is a key indicator of when interest rates may rise. If the level of inflation gets higher than 2%, then this increases the case for the Bank of England to raise interest rates. 

We were expecting the figure to come in at 1.8%, however it was actually slightly lower than this at 1.6%. The lower number eases the pressure on the Bank of England to consider near-term interest rate rises and pushes the balance more in favour of a delay into next year. 

So that is what has caused the Pound to fall today, as the charts below shows. We are now sat at a 4 month low for Pound/Dollar rates, and a 3 month low for Pound/Euro exchange rates: 

What next for Pound/Euro & Pound/Dollar rates? 

Tomorrow morning we will see the recent minutes to the Bank of England’s decision to hold interest rates. These will show if any of the 9 members voted for a rate hike and what was discussed. 

I think there is a good chance at least one of the members voted to raise rates. If this is the case, I would expect the Pound to gain. If none of the members voted for a rise, then we could see the Pound fall even further. 

Are looking to get the best possible exchange rates? 

In addition to writing this blog to keep clients up to date with exchange rate movements, I can source you exchange rates that are up to 5% better than banks can offer. So if you need to buy Euros, convert funds back to Pounds, or indeed convert any international currency to another, then get in touch to see how I can help you. 

It is free to make an enquiry and get a quote, and you could save thousands of Pounds.

Click here to make an enquiry today and see how much you could save.

Pound recovers over interest rate confusion

Monday 18th August 2014 
Things can move very quickly in the currency markets, and the Pound has recovered some of its losses today. So what has caused the Pound to rise? Strangely it is exactly the same as what caused it to fall last week; comments from the Governor of the Bank of England, Mark Carney. In today’s report I’ll look at the mixed signals he is giving on interest rates, and why this is affecting exchange rates.

Remember I can help you achieve exchange rates much better than available at banks, so if you need to convert one currency to another, click here to send me a free no obligation enquiry today.

Mark Carney continues to confuse the market over interest rates 

In my post last Wednesday, I explained that it was the expectation of interest rates going up in the UK that has been pushing the Pound higher and higher this year. Last week however Mark Carney hinted that rates would not be going up this year, and that is what caused the Pound to drop last week. (Higher interest rates strengthen a currency and vice versa).

Over the weekend however in an interview in the Sunday Times, he was very non-committal, saying that holding off raising rates is "an expectation not a promise". 

He seems to change his mind quicker than the weather in the UK; one week he says that “rates would not rise above their current historic low, of half a per cent, before next year because of a "remarkably weak" rise in real wages.” and just a few days later he says that “the base rate may have to go up before households enjoy a rise in living standards.” 

So which is it? Confused? We are, and I think Carney may be too!  A little while ago his mixed signals over interest rates have been compared by one MP to him blowing hot and cold, like an unreliable boyfriend, and it's causing volatility in exchange rates.

What effect has this had on exchange rates? 

His comments last week caused the Pound to fall, however this morning the Pound was up again as markets try to decipher when interest rates will go up. 

So which was could rates move in the coming weeks? It’s impossible to know, and much will depend on what Carney says next.

The most important releases for the UK will be Wednesdays Bank of England minutes. These will show what Carney and his Monetary Policy Committee discussed when they recently decided to keep rates on hold. With Carney not giving a very clear picture on what his thoughts are with interest rates, these minutes will be watched very closely to try and decipher what the other 8 members of the rate setting committee think. If one or more of them voted for a rate hike, expect exchange rates to go up. If all 9 members voted to keep rates on hold, expect the Pound to fall. 

Are looking to get the best possible exchange rates? 

Get in touch to see how I can help you. Regular readers will know there is alot that can affect the exchange rate, and taking advantage of my 10 years  expertise in the currency markets could save you thousands.

You can have a free no obligation chat with me about the exchange rate, and I can explain what is moving the rate and discuss which way it could move in the future. In this way you can make an informed choice on when to fix your exchange rate. 

When you decide to fix a rate, I can provide commercial exchange rates that are significantly better than banks offer, by as much as 5%. This means that I can save you thousands of Pounds when converting one currency to another. 

 Click here to make an enquiry today and see how much you could save.

Pound falls as interest rates set to remain low for rest of the year

Wednesday 13th August 2014 
As you can see from today's Pound/Euro graph below, Sterling has plummeted today by around 1% against other currencies on comments made by the Bank of England governor Mark Carney, effectively signalling that interest rates are to remain low for the rest of this year. In my post yesterday I warned that if he was dovish about the UK economy then exchange rates could fall, and this is exactly what we have seen happen today. Let’s take a closer look at what he said and why the Pound has fallen against the Euro. 

What did Mark Carney say in his speech? 

 
The Bank of England has halved its forecast for average wage growth, and the Bank's latest quarterly economic forecast also indicated that it believed the level of spare capacity in the UK economy has narrowed to around 1% of GDP. 

Mr Carney said there were still "a lot of uncertainties to contend with" given record participation in the jobs market, "remarkably weak" wage rises and a rising number of threats to the global economy.   

He said that whenever interest rates did increase, they would still do so gradually. Chris Williamson, chief economist at economic data firm Markit said it is was likely that "calls to raise interest rates would start to gather strength in coming months," but that an interest rate rise still looked some way off.

Read a full outline of his comments here.

What does this mean? 

Effectively he is saying that as wages aren’t growing fast enough, there isn’t enough spare capacity in the economy to allow a raising of interest rates. This means that it is likely interest rates won’t be going up anytime soon, and when they do they will only rise very gradually.

Why has this caused the Pound to fall? 

Sterling has been strong recently on speculation interest rates will be going up, as this drives investment into the currency due to the potential higher return on offer. Today’s comments indicate that rates will remain at their record low of 0.5% for some time to come. This means that investors have sold the Pound for currencies that offer a higher return, and the sell-off has caused the Pound to weaken and exchange rates to move down. 

What does this mean for your currency requirement? 

The currency markets are very volatile, and when converting large sums even a small movement in the rate can end up costing you thousands. The service I provide is twofold. Firstly you can have a free no obligation chat with me about the exchange rate, and I can explain what is moving the rate and discuss which way it could move in the future. In this way you can make an informed choice on when to fix your exchange rate. 

When the time comes to fix a rate, I can provide commercial exchange rates that are significantly better than banks offer, by as much as 5%. This means that I can save you thousands of Pounds when converting one currency to another. 

If you need to convert funds and would like to discuss what is happening with rates, and obtain a quote to compare with your bank to see how much you can save, click below to send me a free no obligation enquiry today. It is free to make an enquiry and does not obligate you in any way. 

Click here to make an enquiry today and see how much you could save.

Pound/Euro recovers, but tomorrow is key for what happens next

Tuesday 12th August 2014 
Sterling has steadily recovered its recent losses today, clawing its way back to around €1.26 vs the Euro. This was in part due to an EU economic sentiment survey that was released this morning that showed there isn’t much optimism about the financial health of the EU economy. This caused the Euro to weaken off slightly and become cheaper to buy. 

That wasn’t the only reason though, as the Pound rose against most other currencies today including the US Dollar. I think this is purely Sterling recovering from the drops we saw at the end of last week due to geopolitical tensions in Ukraine and the Middle-East. The Chart below shows how the Pound/Euro rate has moved throughout today.

Bank of England and Unemployment figures on Wednesday - a very important day for exchange rates

Tomorrow at 09:30am we have some very important UK economic releases. The latest UK Unemployment figures are released, and as they are a good overall barometer of the health of the economy, they could affect Sterling exchange rates. I expect the figure to come in around 0.7%. Any lower than this would likely cause exchange rates to go up, and vice versa. 

Of more importance will be the BoE Inflation report and following speech by the BoE governor Mark Carney. Regular readers of my blog will now that it is the rumour of interest rates going up in the UK that has been strengthening the Pound to 2 year highs against the Euro, however it’s still not clear if rates will go up later this year, or early next. (The rumour of higher interest rates tends to strengthen a currency due to the higher return on offer, making investors buy the Pound). 

We will be closely watching what Carney says tomorrow. Any hints of rates going up would cause the Pound to rise, however if he is quite negative about the economy saying that there are lots of factors to consider such as wage growth and house prices, then the market could take this as a sign rates won’t go up until 2015. If that’s the case, expect the exchange rate to drop. 

Fix an exchange rate now or wait to see if rates will improve? 

This is a question I’m asked many times each day, and the simple answer is nobody knows which direction exchange rates will take. Personally I think that we won't see much more than €1.26/€1.27 in the near term, and there are lots of risks to the downside that could move things down, such as the Scottish Independence vote which I talked about recently. What we can do however is look at recent trends, the things that are moving rates, and make an informed decision on when to fix your rate. 

Do you need to buy Euros perhaps for property overseas? Are you bringing your funds back to the UK after selling? Maybe you are a business that deals internationally and currently use your bank? 

Whatever your currency needs are, get in touch for a free quote on the rates I offer. I have over 9 years’ experience as a currency broker and can help you achieve exchange rates far better than banks and other financial institutions may offer. It costs nothing to make an enquiry and you could find the savings run into thousands of pounds. 

Click here to send me a free enquiry today. 

A busy week for exchange rates - what could happen to the Pound?

Monday 11th August 2014 
Good afternoon. Exchange rates have recovered slightly today after the drops we saw at the end of last week, caused by global uncertainty over the conflicts in Ukraine and the middle-east, as explained in my most recent post. Today has been quite quiet as there is little economic data for the markets to digest. 

This week however will be anything but quiet, I think today could be the calm before the storm as we have some significant data releases this week that could affect which way exchange rates move in the coming weeks. 

For the UK, we have unemployment figures, a Bank of England (BoE) report, the latest Gross Domestic Product (GDP) figures, and a speech by the BoE Governor Mark Carney. In recent speeches he has given mixed signals on when interest rates may start rising, even being accused of behaving like an unreliable boyfriend, and that had caused the Pound/Euro rate to go up or down. So his comments could well cause further volatility in exchange rates. 

So, lot's that I think could affect the market this week and a full breakdown of this week’s data is listed below. 

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This week’s economic data releases 

Tuesday 12th August - There is no UK data of note, however GBP/EUR rates could still be affected as we have EU and German Economic Sentiment figures released at 10am. We also have House price data from Australia that could move GBP/AUD, and the monthly US budget statement could give indication on future US economic policy, so watch for GBP/USD today. 

Wednesday 13th August – In my view today is the most important one for Sterling exchange rates. We have the latest UK Unemployment numbers, along with a Bank of England inflation report, followed by a Speech by BoE Governor Mark Carney. As I stated above, his comments could cause changes to the value of the Pound. Elsewhere, US Retail Sales are released later this afternoon from the United States. 

Thursday 14th August – Today is busy for EU data – Inflation numbers, Gross Domestic Product, and a monthly report from the European Central Bank, all of which will give indications how the EU economy is performing and so GBP/EUR rates could be affected. From the USA today we have the latest Jobless Claims numbers 

Friday 15th August – Another important day for the Pound as we have the latest Gross Domestic Product figures. I expect the monthly figure to be 0.8% and the annual figure 3.1% - any lower than this expect exchange rates to drop and vice-versa. Elsewhere the USA has inflation figures released later in the afternoon. 

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Pound falls further as US Airstrikes begin in Iraq

Friday 8th August 2014 
The Pound has continued to fall today, partly due to further disappointing economic UK data, and also market uncertainty due to the airstrikes this afternoon in Iraq.

UK Data causes Pound to drop further 

UK Trade Balance figures were released at 09:30am this morning, and they were worse than expected causing the Pound to fall. I had warned recently that exports may be affected by the recent strength of the Pound, and it seems this is what has happened. Earlier this week I warned there could well be a further drop in the Pound. 

Yesterday the Bank of England and European Central Bank both kept policy as expected and there wasn’t much of an effect on exchange rates. 

In a few weeks we will see if any members of the BoE voted for a rate hike. If they did, the Pound may recover slightly. 

US Airstrikes cause jitters in the markets 

Yesterday president Obama authorised air strikes in Iraq, and it hasn’t taken long for them to start. In the last few hours American aircraft have started pounding targets in northern Iraq. 

This combined with unrest across the Middle East in Iraq, Gaza, Syria and Libya has given investors lots of uncertainty. Global stock markets have fallen, the price of oil and gold has risen, and safe haven currencies have gained while riskier currencies are losing value. 

So the US Dollar has gained strength, the Pound has weakened, and as a result exchange rates have fallen a further basis point in a day. 

Are you looking for the best exchange rates? 

My blog aims to keep people informed of what moves exchange rates, in order to help people decide when to fix a rate. I can also help you achieve exchange rates up to 5% better than banks can offer. 

So if you need to buy Euros, convert funds back to Pounds, or would simply like to have a chat about the way exchange rates are moving, click below to send me a free no obligation enquiry today. 

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Pound/Euro & Pound Dollar forecast 2014

Wednesday 6th August 2014 
Good afternoon. The currency markets remain quite volatile, with Pound/Euro rates recovering slightly this week back to the €1.26 mark; however Pound/Dollar rates have fallen to around $1.68, quite a bit below the 5 year high we recently saw. Today I’ll cover what has been happening to exchange rates, including forecasts on where the GBP/EUR and GBP/USD rate may move in the coming weeks. 

Pound/Euro 

As you can see from the chart below, the Pound/Euro rate recently hit a 2 year high of €1.27. Many thought the rate would continue to climb towards 1.30 however I warned that I thought the market had peaked, and the Pound/Euro rate was as high as it may go in the short term. 

Indeed over the course of the last month the rate has failed to improve, and has dipped several times due to poor UK economic data. There have been warnings from the IMF that the Pound is far overvalued, and UK economic figures are starting to disappoint. For much of 2014 the UK has been enjoying a robust economic recovery, and this had been driving the Pound upwards. 

It now seems the good news is all priced into the value of the Pound, and that’s why the rate has leveled off. This morning we had some poor UK Manufacturing and Industrial production figures that knocked the Pound lower, however it soon recovered as we saw poor German factory orders that weakened the Euro and reversed the drop. 

The next mover for exchange rates will likely be tomorrow’s Bank of England and European Central bank statements. Clues could be given to monetary policy, and any surprises could easily cause exchange rates to move significantly. 

Which way could Pound/Euro move in the coming months? 

It’s impossible to predict the market, but my view is that the Pound is unlikely to break higher in the short term. The fact that interest rates will only rise slowly in the UK is likely to keep the Pound in check, so if you need to buy Euros this year, you should consider fixing the rate while it’s so good. You can fix the rate for up to 2 years into the future by lodging 10% of the total you want to convert. Click here to find out more about these types of contracts. 

Those with Euros to move back to Pounds should also be cautious. While rates have stopped moving against you, you don’t want to leave yourself exposed. A Stop Loss order protects you against the exchange rate getting worse, while still allowing you to take advantage of any gains in your favour. 

If you are looking for the best rates between Pounds and Euros, click here for a free no obligation enquiry on how we can help you and the rates we can offer. 

Pound/Dollar forecast 2014

Recently Sterling/Dollar was comfortably above the $1.70 mark, however has been falling in recent weeks. I expect this to continue due to the fact the US economy is starting to recover, and this is strengthening the Dollar making it more expensive to purchase. 

The political uncertainty in Ukraine and the Middle East is also causing the ‘safe haven’ US Dollar to gain strength. I wouldn’t be surprised to see rates back towards the $1.60 mark by year end. 

Need to buy or sell US Dollars at the best rate? Click here for a free quote. 

Get in touch for a free quote on our exchange rates 

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Click here to make a free enquiry today and find out how I can help. - See more at: http://www.foreignexchangerateforecasts.blogspot.co.uk/2014/07/pound-falls-further-against-other.html#sthash.iBgo6lMi.dpuf

Buying or selling property abroad? 

Converting Euros back to Pounds? 

Buying goods from overseas? 

Topping up your Euro account in France? 

Import materials from China for your business? 

Want the very best rates of exchange?

- See more at: http://www.foreignexchangerateforecasts.blogspot.co.uk/2014/07/pound-falls-further-against-other.html#sthash.iBgo6lMi.dpuf

Get in touch for a free quote on our exchange rates 

• Buying or selling property abroad? 
• Converting Euros back to Pounds? 
• Buying goods from overseas? 
• Topping up your Euro account in France? 
• Import materials from China for your business? 
• Want the very best rates of exchange?

Whatever your currency needs, large or small, my service can help you achieve the best exchange rates and utilise contracts that can protect your bottom line. 

Click here to make a free enquiry today and find out how I can help. - See more at: http://www.foreignexchangerateforecasts.blogspot.co.uk/2014/07/pound-falls-further-against-other.html#sthash.iBgo6lMi.dpuf

Get in touch for a free quote on our exchange rates 

• Buying or selling property abroad? 
• Converting Euros back to Pounds? 
• Buying goods from overseas? 
• Topping up your Euro account in France? 
• Import materials from China for your business? 
• Want the very best rates of exchange?

Whatever your currency needs, large or small, my service can help you achieve the best exchange rates and utilise contracts that can protect your bottom line. 

Click here to make a free enquiry today and find out how I can help. - See more at: http://www.foreignexchangerateforecasts.blogspot.co.uk/2014/07/pound-falls-further-against-other.html#sthash.iBgo6lMi.dpuf