GBP/USD falls as FED announce end to QE

Thursday 30th October 2014 
Sterling/Dollar has plummeted overnight, following the FED’s expected decision to end its Quantitative Easing (QE) programme. This also had the effect of weakening the Euro, pushing GBP/EUR rates higher. The charts below show the currency movements: 

FED announce end to QE 

The US Federal Reserve has announced it is ending its quantitative easing (QE) stimulus programme, saying that it was confident the US economic recovery would continue, despite a global economic slowdown. The central bank, which also said it would not raise interest rates for a "considerable time", has gradually cut back QE since last year. 

While the decision was expected, it did have the effect of strengthening the US Dollar, bringing rates down below the $1.60 mark, however this morning GBP/USD recovered to around $1.60. The main reason the rate fell is their hawkish tone on interest rates.

Pound/Euro rises 

As investors bought the Dollar, they sold the Euro which caused the single currency to weaken, pushing rates up above €1.27. This has happened several times over the last few months, so I expect rates to dip back off again in the coming days and weeks as has been the trend of late. 

Getting the best exchange rates 

If you need to perform a currency transaction, get in touch with me today by clicking here. The rates I can provide are up to 5% better than banks or other brokers can offer. In addition to excellent rates, I can also provide an insight into what is moving the rate, to help you to decide when to fix your rate.

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GBP/EUR gains unlikely as UK interest Rates set to remain low

Wednesday 29th October 2014 
Pound/Euro rates have slipped slightly in the last 24 hours, bringing the mid-market rate down to €1.2647. While a little lower than the recent 6 year high, it’s still a very attractive buying level for Euros given that last summer rates were as low as €1.14. 

GBP/EUR gains unlikely as UK interest Rates set to remain low 

Part of the reason the Pound has failed to go any higher against the Euro is the fact interest rates are no longer expected to go up any time soon. Reinforcing this view was a speech this week from the Bank of England (BoE) deputy governor Jon Cunliffe. 

In it he said that interest rates can be kept at their current record low level for longer than first thought, saying that weak pay and lower inflation, coupled with slower UK growth and slowdown in the global economy meant the BoE should remain "cautious". 

So with rates now set to remain at their record low of 0.5% for quite some time, it’s hard to see what would push Sterling exchange rates higher. Those that need to buy Euros should therefore consider locking in a rate now while it is still close to the 6 year high. 

Those selling Euros however should be cautious. While the Pound is unlikely to gain, a deterioration of the EU economy could weaken the Euro, meaning less Pounds for those that are converting the single currency back to Sterling. 

If you need to convert Pounds to Euros, or Euros to Pounds, click here to get a free quote and find out more about the foreign exchange services I offer. Rates I source are up to 5% better than banks can offer, so you could save thousands of Pounds by comparing the rates I offer. 

Pound/Dollar set to drop? 

GBP/USD has been on the way down for a few months now, dropping from $1.72 to $1.60. Currently rates hold firm around $1.6140. However the US Federal Reserve is expected to announce the end of its quantitative easing (QE) programme later, and this could strengthen the Dollar, make it more expensive to buy and pull the GBP/USD rate down further. 

The FED has been gradually cutting back the scheme, which began in 2008, since late last year. The end of QE, assuming it does indeed come, will nonetheless be an important milestone in the repair of the US economy and likely strengthen the Dollar. 

Whether it makes a difference to the GBP/USD rate however remains to be seen. As it’s widely expected to happen, it will be priced into the rate already, but it’s impossible to know by how much. I wouldn’t be surprised to see rates drop below the $1.60 level throughout the rest of 2014. 

If you have a requirement to buy or sell USD, click here to send me a free enquiry to see how I can assist you in getting the best possible rates.

What next for Sterling exchange rates?

Monday 27th October 2014 
Good afternoon. The Pound is currently trading at the top end of its recent range against the Euro, sitting at a mid-market level of €1.27 at the time of writing. The European Bank stress tests over the weekend were quite poor, which has weakened the Euro slightly making it cheaper to purchase. Against the US Dollar, the Pound is also up slightly at $1.6135. 

Which direction could Sterling take this week? 

 
As I often point out, it’s impossible to predict the market. However, with a good knowledge of economic data and recent trends, it is possible to make an informed choice as to when to fix your exchange rate. You should also consider taking advantage of a free consultation with me if you need to get the best possible rates of exchange. Below I will list all this week’s economic data that I think will have an effect on exchange rates. 

Be aware if you are buying Euros, that the rate has reached these levels many times recently before dropping back away. Given we’re at the top end of the recent GBP/EUR trading range, get in touch today to get a quote and find out how to take advantage of these rates, even if you don’t need your currency right now. 

I’m afraid we only deal with bank to bank transfers for amounts of £5000+, we do not deal in cash or holiday money. If you need to exchange currency for a property abroad, topping up your Euro account, or if you buy or sell goods overseas, I can help you get exchange rates up to 5% better than banks can offer. 

Click here to make a free no obligation enquiry today. 

This week’s economic data releases. 

Monday – This evening at 7.30pm, one of the Bank of England (BoE) members gives a speech. Any clues as to future interest rate movements could affect the value of the Pound. 

Tuesday – Most data today is from the USA – Durable goods orders and consumer confidence, both of which could affect GBP/USD exchange rates. Later in the evening at 6.30pm we have another BoE member giving a speech. 

Wednesday – Germany has a bond auction today, and the UK releases Net lending data, so we could see changes in the GBP/EUR rate. There is also yet another speech by a Bank of England member. We also have Business Confidence data from New Zealand, in addition to their latest decision on Interest rates, so GBP/NZD could change. Over in the states we have a statement by the FOMC, and their interest rate decision. 

Thursday – Yet another BoE member gives a speech today! Other than that Nationwide House prices is the only UK release. In Europe we have Spanish growth data, and German unemployment figures. Stateside, FED chair Yellen gives a speech, and the latest unemployment figures are also released. 

Friday – Nothing of note from the UK today. In Europe we will see German Retail Sales, French Spending, and inflation estimates for the Eurozone, all of which could affect the GBP/EUR rate. In the USA we have Employment data, Personal Spending, and inflation numbers. 

For more information on how the above could affect your currency requirement, or to get an exchange rate quote to compare with your bank or existing broker, click below to send me a free enquiry now. 

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Pound/Euro forecast between €1.24 and €1.27

Tuesday 21st October 2014 
In the week since my last post, we have seen significant volatility in Pound/Euro rates. As you can see from the chart below, we have seen highs touching €1.27, and lows or nearly €1.24: 

 

What is causing the volatility in GBP/EUR rates? 

The movements in the exchange rate over the last week have been very large indeed. In the last 7 days alone, the cost of buying a €250,000.00 property has differed by nearly £5000.00 purely due to fluctuations in the exchange rate. This clearly illustrates how important your timing is, in addition to having a good knowledge of what can move the exchange rate. 

The Pound fell last week on data and comments from the Bank of England, which suggest that interest rates are going to remain low for up to a year. This has taken the wind out of the Pound’s sales and caused exchange rates to drop. 

The fall was short lived however, as data from the Eurozone doesn’t exactly inspire confidence. Various EU economies are not performing very well, and this has weakened the Euro helping the rate to recover. 

Will Pound/Euro rates go up or down in the next 6 months? 

I personally think that the Pound’s strong run has come to an end and all the good news surrounding the UK economy is now largely priced into the rate. The only thing I can see that would cause rates to rise would be a further deterioration of the EU economy. 

Indeed I think it’s likely the European Central Bank will have to create money to pump in to the economy, which taken on its own could weaken the Euro and push rates up. 

What’s hard to quantify however, is what the knock on effect of an EU slowdown would have on the wider global economy, particularly the UK. The EU is our largest trading partner and as Europe slows, our growth is also at risk. So a weakening of the Pound could also be a result of a weakening in the Eurozone. 

In the short term, tomorrow’s Bank of England minutes showing how keen they are for an interest rate hike is the main event this week that will affect Sterling exchange rates. 

Get in touch to find out how to get the best exchange rates 

When you need to buy or sell currency, to buy property abroad for example, the exchange rate can make a huge difference to the cost. 

Getting the best exchange rates is paramount, as is timing your purchase. Often a property purchase or sale can take several months to complete, during which time your return could be severely affected by changes in the exchange rate. 

If you need to buy or sell currency for any reason then it’s worth getting in touch with me to discuss your requirements. I can provide you a quote for you to compare with your bank or existing broker. I can also explain what is happening to the exchange rate including helping you decide when to fix a rate. Also, I have various tools and contract types to protect you against the market moving against you, and ensure you don’t get a worse rate than is necessary. 

It’s free to make an enquiry, doesn’t obligate you in any way, and like thousands of clients that have contacted me through my blog, you could save thousands of pounds. 

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Pound falls further on low inflation

Tuesday 14th October 2014
Sterling has fallen by a further cent today against the Euro, with rates dropping down into the €1.25’s. Against the US Dollar, rates have dropped by 1.5 cents bring rates down into to around $1.59. What has caused the Pound to fall? 

It is due to very low UK inflation numbers. Figures this morning showed that UK inflation fell to a 5 year low of 1.2%. The reason this has caused rates to fall is that these new low inflation numbers meant that an interest rate rise in the UK is very unlikely in the short term. I expect the Bank of England will now hold off well into 2015, probably after the general election. 

On the one hand, the UK economy is the fastest growing in the developed world, and this would normally mean a rise in interest rates. Indeed it’s this speculation that has been driving the Pound up in recent months. However these latest figures change all of that, so it looks like the Pounds run has come to an end for the time being. 

In my most recent report I warned that this could well be the case, and that rates were unlikely to go higher. That has proved to be true and rates have now tumbled away, repeating the trend as I suggested would be that case. 

If you need to buy or sell Euros, click here to make a free enquiry. 

What else could affect exchange rates this week? 

Tomorrow is a key day for Sterling/Euro rates, as we have the latest Unemployment figures for the UK In addition to this we have 2 speeches by the ECB president Mario Draghi at 8am and 7pm respectively, and his comments could cause a change in the value of the Euro. 

For Sterling/Dollar, watch out for a host of economic data from the states such as Retail Sales, manufacturing, Unemployment and House data. Also on Friday we have a speech by FED chair Janet Yellen. If these figures are impressive as recent US data has been, then we could see the US Dollar strengthen and GBP/USD rates drop even further. 

Are you looking for the best exchange rates? 

If you have a currency transaction to conduct in the coming weeks or months, then get in touch with me to see how I can help. I can provide excellent commercial exchange rates that are usually significantly better than banks and other brokers. I can also explain what is likely to move exchange rates in the coming weeks to help you make an informed decision on when to fix a rate. 

I have worked in financial services for over 15 years, specialising in commercial foreign exchange for the last 10. Why not take advantage of my free consultative service to see if I can save you money on your currency exchange. I look forward to hearing from you. 

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Pound at risk as Euro crisis weighs on UK

Thursday 9th September 2014
After falling earlier this week, GBP/EUR rates recovered slightly yesterday due to a weaker Euro. Let’s first look at why rates fell. It’s all to do with inflation, and the impact this has on when the Bank of England (BoE) will raise interest rates.  As regular readers will know, the speculation on interest rates going up has been the driver behind the Pound’s appreciation this year, as higher rates strengthen a currency due to the better return on offer for investors.

However inflation in the UK is now easing which could allow the central bank to keep interest rates low. This is what has cause the Pound to drop away this week. Indeed yesterday the BoE’s Monetary Policy Committee (MPC) decided again to hold UK interest rates at a record low of 0.5% which was not a surprise. Nor was their decision not to extend its quantitative easing programme beyond the £375bn already spent. In two weeks, the Bank will reveal how members of its rate-setting committee voted on the rates decision. Last month, two members voted for a rise.

Yesterday afternoon the European Central Bank’s (ECB) president Mario Draghi gave a speech which you can read in full here. There was nothing new in his comments however, and due to this there was little to no market reaction. 

Will Pound/Euro rates go up or down?

It is of course impossible to predict market movements, but looking at the pattern over the last few months, Euro buyers should give serious consideration to fixing rates while they are still close to a 6 year high. There is nothing to suggest rates will break higher given they have failed to do so for many months. Supporting this view is Peter Kinsella, currency strategist at Commerzbank who said yesterday that "A lot of the good news has already been priced into the pound," indicating many analysts think the Pound has run as high as it can. Chancellor Osborne also warned yesterday that Britain’s recovery is at risk from a new EU recession.

FED Comments weaken US Dollar

GBP/USD rates have dropped from $1.72 to below $1.60 in recent months; however this week has clawed back some losses as the chart below shows, settling comfortably above the $1.62 market. The pound had surged more than 15 percent against the dollar in the year to mid-July on expectations the BoE would raise interest rates before its peers in the United States and Europe.

But it has fallen almost 7 % in the last three months as expectations of a rate hike by the end of 2014 faded.

The latest nonfarm payrolls released last Friday had led me to believe the Fed might hike interest rates sooner rather than later, however recent FED minutes this week quashed any chance of that, and suggested the central bank was in no such hurry. This weakened the USD slightly pushing rates higher.

 

Getting the best exchange rates

When converting large sums, small differences in the rate can have a huge impact on your return. I have various tools and contracts available to protect against rates falling, ways of targeting higher rates not available, and a robust understanding of the currency markets and what can move them.

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What could affect exchange rates this week?

Monday 6th October 
Good afternoon. The Pound has fallen a little further this morning, dropping to €1.2715 vs the Euro, and against the US Dollar we have seen rates drop below the $1.60 barrier to $1.5977. Exchange rates seem to have stabilised there and so in today’s report I will list economic data releases this week that could have an impact on exchange rate. 

What makes exchange rates go up and down? 

There are various factors that affect exchange rates, such as economic data, political instability, natural disasters like floods and droughts, and acts of war such as the current conflicts in the Middle East and Ukraine. 

Only one of these is predictable, and that’s economic data releases. These are forecast well in advance, and so if figures are better than expected, a currency can strengthen. If however numbers are worse than forecast, a currency can fall in value. 

Below is an outline of this week’s data that I think could affect the Pound and Sterling exchange rates. If you have a currency transaction to perform, then you can get in touch with me for free by clicking here. I can then give you a free consultation on which way the exchange rate may move in the coming weeks and months. I can also provide you a quote to compare with your bank or existing broker. I can source excellent commercial exchange rates, and even a small improvement could save you thousands. 

Click here to send me a free no obligation enquiry today 

This week’s economic data releases 

Monday 6th October – nothing of great importance on the agenda today. Some German factory order numbers were worse than expected but this had no effect on the value of the Euro. Later this evening we see New Zealand Business confidence numbers that could affect the GBP/NZD rate. 

Tuesday 7th October – Today we have some UK Manufacturing numbers, Halifax House Prices, and a Bank of England Credit Survey. The most important release of the day however will be a Gross Domestic Product (GDP) estimate from the NIESR. Elsewhere, the United States sees speeches by FED members. So the Pound and Dollar could both be affected today. 

Wednesday 8th October – A quiet day today data wise, and the only interesting releases are from the USA in the form of the FOMC minutes. Any clues on the timing of a US interest rate rise could affect GBP/USD exchange rates. 

Thursday 9th October – This is the most important day for the Pound in my opinion, with the latest BoE decision on interest rates. While it’s very likely rates will be left on hold, the statement they make afterwards could hold clues as to when they will start to raise. Any hints of rates going up in the coming months would cause the Pound to rise. If however they indicate a rise is some way off, expect Sterling exchange rates to fall. 

We also have a speech by European Central Bank president Mario Draghi today, so it could be quite volatile for Pound/euro rates. It’s also the first day of the G20 meeting, so any surprises there could also affect the currency markets. 

Friday 10th October – UK Trade balance figures are the only releases of note for Britain. Elsewhere, Canada has its latest unemployment figures, and we have day 2 of the G20 meeting. 

If you would like a quote, or a free chat about exchange rates and what I can do for you, click here to send me a free no obligation enquiry today. 

Pound falls away from 6 year high vs Euro

Thursday 2nd October 2014 
The Pound has fallen quite sharply today, falling from 1.2875 to 1.2750 against the Euro. Against the US Dollar we have seen rates fall from 1.6250 to 1.6125. What’s been going on? 

Pound/Euro drops as single currency strengthens 

Earlier this week GBP/EUR rates were close to a 6 year high, peaking at 1.2875 yesterday afternoon. It looks like investors have had enough of buying the Pound however, and as soon as markets opened this morning the Pound steadily lost value, as you can see from today’s chart:  

Euro gains strength, but remains on a tightrope

Today we had the European Central Bank (ECB) announce its decision to hold interest rates at the record low of 0.15%. Not really a surprise, as they can’t really cut it any lower than they already have! This was expected, so all eyes and ears were on the press conference that followed, to see if the ECB president Mario Draghi said anything about their Quantitative Easing programme. 

It turns out that what moved the currency markets wasn’t to do with what he said; it was more to do with what he didn’t say. The BBC are reporting that the ECB are starting it's asset buying programme, however in his speech he declined to actually give any figures on how much this would involve, so we don't really know any more about these plans than we did already. The fact that he didn't clarify 'QE proper' means that the Euro actually gained strength causing Pound/Euro rates to drop by 1% on the day so far. This doesn't sound like much but if you're converting a large sum, small changes like this can be costly. 

Given the recent figures showing that inflation is at a 5 year low in the Eurozone, many including myself thought that Draghi would have to pursue a proper QE programme, much like the UK and US have done in recent years. However he gave no indication of an imminent stimulus program through the purchase of sovereign bonds. He simply said that their mandate is to bring inflation back to a level that is close to but below 2%. 

As markets were expecting a little more from his comments, the Euro gained strength and became more expensive to buy, pulling levels down from the recent highs we have seen. 

Do you have Euros to buy or sell in the coming months? 

Those that need to buy Euros and took advantage of the recent highs, or had a ‘Stop Loss’ order in place to protect against a downturn in the rate will be pleased as the rate has now dropped. If you still need Euros in the coming months however, there are tools to help you achieve the best rate of exchange within your timeframe. 

Don't just leave things to chance, speak to a specialist currency broker like myself to discuss what is happening in the market to help you make an informed choice on when to fix your rate. Contact me today by clicking here for a no obligation consultation on what I can do for you and the rates we can offer. 

Those that need to convert Euros back to Pounds should consider taking advantage of this spike in your favour. I think that in the long term, the ECB will pursue more aggressive stimulus, and this coupled with higher interest rates in the UK should eventually put GBP/EUR back on its upward path. 

Click here to make an enquiry on how I can help you achieve the best possible exchange rates.