Monday 29th December 2014 Good morning and welcome back to the currency markets after the Christmas break. Given the market holidays there has not been much movement in exchange rates, so today’s report is a reminder how you can take advantage of the commercial exchange rates that we can offer. Pound/Euro rate near a 6 year high
2014 has been a good year for the Pound/Euro exchange rate, and we are currently enjoying exchange rates within a few percent of the best they have been in 6 years. In real terms this means a €250,000.00 property overseas now costs a staggering £20,000.00 less than last summer, purely due to exchange rate movements. The Strong Pound is really driving the overseas property market and there has rarely been a better time in recent years to purchase a property abroad. Despite the good Pound/Euro exchange rate however, it has failed to go any higher in recent months. In light of this, it’s an opportune moment to look at the tools and contract types a specialist currency broker can provide, to help save you money when buying overseas. If you need the best exchange rates, click here to get a quote a find out more about the services we can offer. The tools available to help you take advantage of the best exchange rates
Using a currency broker as opposed to your bank can save you thousands of Pounds simply by achieving better exchange rates. This is only part of the story however, as a specialist broker has various tools available that can help you take advantage of the current rates even if you don’t need your currency for some time. There are also ways to protect you against adverse exchange rate movements. Spot Contract - The Spot Contract is the most basic and commonly used foreign exchange product. It is an agreement to buy or sell one currency in exchange for another. You have 2 days to settle the contract, at a price based on the prevailing "spot exchange rate" (the current value of one currency compared to another.) Although a Spot contract lets you buy or sell currency as you need it, exchange rate movements are highly unpredictable, even during a single trading day. Upon receipt of cleared funds currency is available for onward transmission. This type of contract is typically used for paying an initial deposit for a property, or to top up your account overseas to pay bills. Forward Contract - A Forward Contract lets you buy or sell one currency against another, for settlement up to 2 years into the future. Unlike spot contracts, a forward contract eliminates the risk of fluctuating exchange rates by locking in a price today for a transaction that will take place in the future. Most importantly it protects you from unfavourable movements in the market, however, be aware that it will not allow for gains to be made should the exchange rate move in your favour during the period between entering the contract and final settlement for the currency. This type of contract is very popular when buying overseas, as usually there is a time period of a few months between paying your deposit and completing your final balance. It allows you to budget as you will know the total GBP cost of your purchase, and protects you against rates falling. For example, you could fix an exchange rate today for £200,000.00 to Euros, and only lodge 10% of the total funds to be converted (£20,000.00) while the majority of your funds remain earning you interest. You wouldn’t buy a property in the UK without knowing the final price, and the same should hold true when buying overseas. Stop Loss Order - A Stop Loss order protects you against adverse exchange rate movements and secures your currency if it falls below a pre-agreed level. This gives you a safety net and ‘worst case scenario’ and doesn’t leave you exposed to a falling market. This is useful when the exchange rate is rising. For example, the current trading level is 1.25. You place a ‘Stop Loss’ to convert your funds should the rate drop below 1.22. In this way you to take advantage of any gains, without leaving yourself open to unnecessary loss should the market move against you, and you know the absolute minimum you will have to spend. Limit Order - A Limit order, which is placed at the top end of the market to secure currency at a specific price that may not be currently available. This type of contract is particularly useful when the markets are moving in a positive direction for you. This type of contract can be using if you are targeting a specific rate, and can be used in conjunction with a Stop Loss order. This week’s Market Data
Monday 29th December – The only data today is Retail Sales from Germany, which are a good overall barometer of the economic health of the EU’s largest economy, so could affect GBP/EUR rates. Tuesday 30th December - Very queit, with the only release US Consumer Confidence. Wednesday 31st December – Again all US based today, with Jobless Claims, Home Sales, and Inflation numbers. Thursday 1st January 2015 – Markets Closed. Friday 2nd January 2015 – The first round of economic figures for 2015 include UK Mortgage Approvals and Manufacturing PMI. The EU & US also releases Manufacturing PMI, and we also see construction data from the States.
Thursday 18th December 2014 The Pound has had a good day today, particularly against the Euro. This morning we saw figures that showed UK retail sales rose at their fastest annual rate in more than 10 years last month. We were expected the number to show +4.5%, and it actually came in at 6.9%. This is partly due to the effects of Black Friday. Retail Sales are a good overall barometer of economic health, and so strengthens a currency when the numbers are better than expected. This caused Pound/Euro to rise from €1.26 yesterday, to €1.2752 at the time of writing. The other reason for the strong performance for GBP/EUR today is seasonal end of year demand for Sterling, and further speculation that the European Central Bank will have to conduct easing measures to prop up the EU economy. It should be noted that this trend has repeated itself several times in recent months, with the Pound/Euro rate getting to these sort of levels, before dropping back to the €1.26 mark again. For this reason, those that need to buy Euros in the next 3 months should consider fixing the current rate with a Forward contract. This works by lodging 10% of what you want to convert, and you can lock in the current rates for up to 2 years. This protects against the rate dropping, and allows you to budget effectively for what you need to buy with your currency, be it a property abroad, a car import, or goods and services from the Eurozone. Getting the best exchange rates
If you have a currency transaction to perform, would like to discuss which way the market is moving, or get a quote to compare with your bank or existing currency broker, click here to send me a free no obligation enquiry.
Tuesday 16th December 2014 It’s been a pretty choppy day in the currency markets, with news from Central Banks and oil prices causing quite a bit of exchange rate volatility. Today I’ll look at what has been happening with some of the main currency pairs. If you need to buy or sell any major international currency, I can source exchange rates up to 4% better than banks can offer. Contact me today to find out how I can help. Sterling/Euro
Pound/Euro rates seem to have been sliding lower over the last few months, and currently stuck between €1.25 and €1.26 which is several cents below the 6 year high of €1.29 we saw in the summer. It’s about the Bank of England and interest rates. In the summer analysts expected a rate hike before the end of the year, and this had caused the Pound to rise in value. It now looks like a rate hike is now some way off, and this has caused the Pound to drop off. Today we saw inflation fall even lower, down to a 12 year low caused by lower fuel prices. This could also slow the UK's economy which may cause Sterling to fall further in the short term. The Bank of England, which targets an inflation rate of 2%, warned last month that the rate could drop below 1% in the next six months, and this poor outlook means that the Bank is unlikely to raise interest rates from the historic low of 0.5% for some time. If you need to buy or sell Euros, click here to get a free quote or discuss the GBPEUR forecast. Sterling/US Dollar & Canadian Dollar
In the last 6 months GBP/USD has dropped from $1.72 down to around $1.56/$1.57. Part of this is due to the weakening of the Pound, but also the US Dollar has been gaining strength recently as their economy continues to impress. It’s likely the US central bank will raise interest rates before the UK, and that’s likely to keep the rate in check. Another reason is the low oil prices. The US imports lots of oil so when the price drops, the USD generally gets stronger and more expensive to buy. The opposite is true of the Canadian Dollar – GBPCAD rates have gone up by 4% in the last month, as the Canadian Dollar has weakened due to the low oil prices. They export lots of oil so their currency has weakened. If you need to buy or sell USD or CAD, click here for a quote or simply to have a chat about what’s moving the exchange rate. Sterling/Australian Dollar
We are currently seeing very good rates to buy the AUD. The current rate is the highest it’s been all year. This is down to a very weak Aussie Dollar. Australia’s main export is Iron ore, which is at a very low price. China buys most of it, and their factory and manufacturing sectors are slowing, meaning less demand for these raw materials. This has caused the AUD to weaken and become cheaper to buy. Due to the slowdown in the Australian economy, they may have to cut interest rates next year and that is also pushing the GBP/AUD rate higher. If you need to buy Australian Dollars, click here for a quote or simply to have a chat about what’s moving the exchange rate.
Russian Rouble
We don’t trade the Russian Rouble, but it’s certainly worth a mention. The Rouble has lost about half of its value this year, and today alone has fallen another 10%. Russia’s central bank last month raised interest rates by 1% to 10.5%. Last night, they hiked the rate to 17% in an effort to stave off the fall in value of the currency. While we don’t trade this currency, I’m mentioning it as it demonstrates how central banks try to use interest rates to alter the value of a currency. On this occasion it hasn’t worked, and fears of fresh sanctions could drag the rouble lower, although it’s mainly due to oil prices. 50% of their GDP comes from oil, so the 5 year low in prices is reflected in their currency. Getting the best exchange rates
If you have a currency transaction to perform, would like to discuss which way the market is moving, or get a quote to compare with your bank or existing currency broker, click here to send me a free no obligation enquiry.
Tuesday 9th December 2014 Yesterday's gains for the Pound and Sterling/Euro in particular were again short lived, with the GBP/EUR exchange rate today dropping back towards €1.26: UK Industrial and Manufacturing production disappoints
The reason for the drop today is due to worse than expected UK Industrial and Manufacturing. As the figures were lower than expected it weakened the Pound pulling exchange rates lower. This is because expectations of when interest rates may start rising will most likely be pushed back in the light of the poor figures. The Bank of England has signalled it will keep interest rates low well into 2015 as earnings struggle to grow more than inflation. The UK GDP estimate released at 3pm today was as expected, so didn’t have any effect on exchange rates. Pound/Dollar up
This afternoon, we saw some Euro strength which pushed GBP/EUR lower, and caused flows out of the US Dollar. This caused the GBP/USD rate to recover to the $1.57 levels. Getting the best exchange rates
If you have a currency transaction to perform, would like to discuss which way the market is moving, or get a quote to compare with your bank or existing currency broker, click here to send me a free no obligation enquiry.
Monday 8th December The Pound has had a good start to the week, rising by nearly a cent against the Euro to 1.2720 and also up against the US Dollar, from 1.5550 this morning to 1.5630 this afternoon: What has cause the Pound to gain against EUR & USD?
There hasn’t been any significant data today, so I’ve put the rise down to comments from the Bank of England, that say the UK economy can cope with higher interest rates. They’ve stated that the majority of people with mortgages could cope with a rise in interest rates, if levels rose to 2.5% from their current 0.5% historic low. The comments mean there is more chance of a rate hike in the first half of 2015 and the Pound strengthened accordingly. (A currency strengthens on the rumour of higher interest rates, as it attracts investment into the Pound due the potential higher return on offer). It’s worth noting however that the Pound/Euro cross seems to be range-bound between 1.25 and 1.28 at the moment, so I don’t think we’ll see rates continue to climb. If you need to buy or sell Euros, get in touch for a free quote and a brief chat on the options you can consider to help you get the best rate. Click here to send me a free no obligation enquiry today. What else could affect exchange rates this week?
Tuesday 9th December – The most important releases today are from the UK, including Industrial and Manufacturing production, along with a NIESR GDP estimate, forecast at 1.8%, 3.2% and 0.7% respectively. If the actual numbers are higher or lower, the Pound could rise or fall accordingly. Wednedsay 10th December – Another important day for Sterling as we have the latest trade balance figures. These show the difference between what we import and export so can often affect exchange rates. Elsewhere GBP/NZD could change as we have an interest rate decision from New Zealand and a press conference afterwards. Thursday 11th December – Nothing of note from the UK today, but GBP/EUR could be affected by inflation numbers from Europe, and a monthly report from the ECB. We also have Australian Employment figures that could alter GBP/AUD rates, and in the USA we have raft of jobless numbers and the latest retail sales. Friday 12th December – Nothing from the UK today, and from the EU we have Employment numbers and Industrial production figures. We end the week with US Inflation figures, and a consumer sentiment survey. Do you have an upcoming currency transaction?
If you need to convert currency then get in touch to find out more about the exchange rates I can offer. I regret we do not deal with cash or holiday money, only bank to bank transfers for amounts £5k+. You may have bought or sold a property abroad, or perhaps your business buys and sells goods from the Eurozone. Whatever your currency needs, you could save thousands by achieving a better exchange rate. Click here to find out more about the rates and currency services I can offer you.
Thursday 4th December 2014It's been a busy week, but all in all we're back to where we started with GBP/EUR rates, now sitting around the €1.26 level again. Let's take a look at what's been happening. Autumn Statement causes Sterling to rise
Wednesday was a good day for the Pound, starting with better than expected services PMI that gave the Pound a boost. This was compounded by the budget statement, which the markets took very positively for the Pound and GBP/EUR rose by over 1% on the day, getting to 1.2766 at the peak. However as is often the case, spikes to the upside can be very short lived and this proved to be the case again during trading today, when the ECB's draghi made comments that pulled the rate back towards the €1.26 level. What caused the GBP/EUR rate to fall?
It was largely comments by the European Central Bank (ECB) president Mario Draghi. As always for the 1st Thursday in the month, the UK and EU central banks announced their decision on interest rates, with both opting to keep rates on hold at record lows. This was expected, and soon afterwards the ECB president gave a press conference. 
You can read his full comments here. He basically hinted that QE is coming for the Eurozone, but the market was expecting a little more clarity. So if it sounds as though they are edging towards quantitative easing, why didn’t the Euro weaken and cause GBP/EUR to go up further? Firstly it's worth remembering that the ECB has already started something that has a lot in common with QE. It is buying financial assets based on private sector loans with newly created money. The difference between this and the US and UK QE programmes is that firstly it’s much, much smaller. Secondly the assets being purchased don’t actually include government debt. The markets were actually expecting him to be a little clearer on exactly when and how their QE programme would be expanded. What he actually said is that there had been "a very rich, ample discussion" on what unconventional instruments the bank had available to it within its mandate, adding that “We discussed broadly all sorts of measures, we... discussed various options of QE. And more work is needed and... we'll keep you informed." In the absence of any clear indication of further stimulus that had been expected, the recent weakening of the Euro had been reversed, and it is this that caused the single currency to strengthen and pull rates back towards the €1.26 level where it has felt comfortable at in recent weeks. Tomorrow's data
GBP/EUR – we have Inflation Expectation measures for the UK, which could affect the consensus of when interest rates will rise, and so could affect the Pound. Over in Europe we have the latest GDP measures which if better than the expected 0.2% could cause GBP/EUR to fall. GBP/USD – there are lots of released from the USA later this afternoon including factory orders, Jobless Claims, and NonFarm Payrolls. The consensus is for 232,000 jobs to have been created in the USA last month, however as the prediction is usually quite far off the actual number, anything higher than this would cause GBP/USD to fall, and vice versa. If you need the best exchange rates, contact me by clicking here for a free consultation on the currency markets and to discuss the tools available to help you achieve the best possible exchange rates. Have a great weekend.
Tuesday 2nd December 2014There are 4 things that generally affect exchange rates like Sterling/Euro, Sterling/Dollar etc. These are: Economic figures such as unemployment numbers, interest rates, Retail sales etc. Then we have natural disasters such as floods, famine and droughts that can affect the economic output of a country and in turn the value of its currency. Thirdly acts of war have an effect as it can drive investment in or out of a country. Lastly there are political events that can affect an economy. A good example of this would be this years Scottish referendum, that caused large fluctuations in the exchange rate. Political instability is the theme of today's post... UK Autumn Budget Statement
At 12.30pm tomorrow afternoon (Wed 3rd December 2014) the chancellor George Osborne will deliver his Autumn budget statement, and this has the potential to affect the currency markets and the value of the Pound. In turn, we could see volatility in exchange rates should there be any surprises. I expect him to outline the various ways in which his economic plan has been working. The rapid growth rate is certain to feature, and he will be keen to highlight the UK's performance over the past 18 months compared with our neighbours in the Eurozone. He is also likely to talk about borrowing, taxes, spending and growth. In years gone by the statement has had little to real effect on the currency markets. This is because for the most part it is simply political theatre, more so tomorrow with a general election just around the corner. This year however could be different... Could the Pound fall following the statement?
Regular readers will know that the Pound rose well through most of 2014, gaining strength on the expectation that interest rates would rise. (Higher interest rates strengthen a currency due to the higher return on offer for investors). In recent months however the Pound has fallen back slightly, due to inflation numbers dictating interest rates will likely remain at record lows well into 2015. Another thing that has kept the Pound in check recently is the threat of deflation in the Eurozone. The EU is our largest trading partner, and any slowdown there would also dent the UK economy. Indeed, it’s not in the UK’s interest for the Pound to get too strong, as our exports become more expensive for EU buyers. If Mr. Osborne gives any surprise revisions to UK growth in tomorrow’s statement it could well weaken the Pound and cause exchange rates to fall. He could also use the opportunity to purposefully devalue the Pound, by highlighting the risks of an EU slowdown affecting the UK economy. We could of course see no effect of the statement at all, however there is more potential than normal for his word to affect the Pound. What else could move rates this week?
After tomorrow, all eyes will turn to Thursday when the UK and EU central banks are both expected to keep interest rates on hold, however statements accompanying the decisions could hint at further stimulus, so I expect a choppy day for Pound/Euro. Mario Draghi, the ECB president could hint at easing which could weaken the Euro. Mark Carney, the UK governor, has been very inconsistent in his views on interest rates, so there is some potential for Thursday to shake up exchange rates. Are you looking for the best exchange rates?
Click here to send me a free no obligation enquiry to see what rates I can offer for your currency transaction. Even if you already use a currency broker, comparing rates can often save you a significant sum when converting large amounts. In addition to excellent rates of exchange, I offer free consultations to anyone that needs to convert currency, to explain the options and contract types available and explain what is moving exchange rates. Click here to send me an enquiry now.
Monday 1st December 2014 
Good afternoon and welcome to a new month. The currency markets have been relatively stable over the last week, with GBP/EUR remaining around the €1.26 mark, and GBP/USD in the $1.57’s. In today’s post I will list the economic data releases for the coming week that I think could affect exchange rates. This week’s economic data releases
Tuesday 2nd December – Today is quite light for UK data, with Construction PMI the only release of note. We’re expecting the number to be 61.2 so anything above this could give the Pound some strength. In Europe, Spanish employment numbers are released. Australia has its latest building numbers, along with an Interest Rate statement from the RBA. Over in the United States there are 2 speeches by FED members, and also the chair Janet Yellen, so GBP/USD could be affected. Wednesday 3rd December – This could be an important one for Sterling, as we have Services PMI and the Autumn forecast Statement. GBP/EUR could also be affected by today’s EU Retail Sales figures and some EU inflation numbers. Most data is from the states today though; Manufacturing, Employment and speeches by FED members. Thursday 4th December – We have the latest interest rate decisions from the UK and EU today. While I expect no movement in the actual rate, speeches by the Banks governors afterwards could well affect Sterling/Euro exchange rates. We also have further US employment numbers this afternoon Friday 5th December – We end the week with a host of US data including Trade Balance numbers and Non-Farm Payrolls. These 2 releases often cause volatility in the exchange rate for GBP/USD. Do you have an upcoming currency transaction?
If you need to convert currency then get in touch to find out more about the exchange rates I can offer. I regret we do not deal with cash or holiday money, only bank to bank transfers for amounts £5k+. You may have bought or sold a property abroad, or perhaps your business buys and sells goods from the Eurozone. Whatever your currency needs, you could save thousands by achieving a better exchange rate. Click here to find out more about the rates and currency services I can offer you.
