Pound/Euro hits €1.36 - will it keep rising?

Friday 20th February 2015 
Sterling/Euro rates have broken through the €1.36 level today, which is a fresh 7 year high. It looks like for the moment the rate is now comfortable above the €1.35 barrier that it had struggled to break through in recent weeks. Now that it’s firmly above this level, it will become a level of support, meaning it’s likely to stay above this threshold and struggle to drop below it should the market fall. 

UK Trade Balance surplus

The Pound gained today partly due to this morning’s Public Sector Borrowing figures. UK government finances showed a surplus of £8.8bn in January, which is the highest for seven years. This better than expected number caused Sterling to gain.

Greece talks 

The main reason for the gains however we’re weakness in the Euro. The ongoing crisis in Greece is causing uncertainty which has been weakening the single currency. Today, Eurozone finance ministers are preparing for a 3rd meeting in order to solve the crisis over Greece's bail-out. 

The Greeks have proposed a 6 month extension of its Eurozone loan programme, as opposed to renewing its existing bailout deal, which would involve continuing harsh austerity measures. Earlier this week Germany rejected this, but I think there is a chance it will be agreed. Time is running out, as the existing bailout deal expires at the end of the month and Greece could run out of money without a new accord. 

There are lots of reports in the media about the possibility of Greece leaving the Eurozone, but personally I think this is unlikely. The most likely outcome in my view is an agreement to the extension the Greece is requesting. This could be seen as simply kicking the can further down the road, but I don’t think the Eurozone would accept Greece exiting as it would be bad news for all concerned. 

Once an agreement is made, how could it affect exchange rates? 

There are several things that could happen, but I think if an agreement is reached, it removes the uncertainty that has been weakening the Euro lately, and this could cause the single currency to regain some strength and bring GBP/EUR rates down from the currency 7 year high. 

Getting the best exchange rates 

In the current climate of uncertainty, the market is very volatile. For Euro buyers this has presented the best exchange rates for over 7 years. It could go higher of course should the Greek situation unravel further, but as I’ve stated above, an agreement could easily bring rates down. 

That’s where having a good currency broker like myself can help you. Unlike a bank I can provide much better rates of exchange, by as much as 5% which can save you thousands of Pounds. It’s not just better rates I provide however, as I can also offer various contracts like Forward Contracts (locking in the current rate for up to 2 years with only a 10% down payment), Limit Orders (placing an instruction to trade should the market hit a target level of your choice), and Stop Loss orders (your currency is bought at pre-agreed level, lower than the current rate, which gives you protection against a market drop while still allowing you to take advantage of further gains). 

These types of orders are very useful to ensure you get the best exchange rates, and banks don’t normally offer these sorts of tools. 

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Pound/Euro hits fresh 7 year highs after strong jobs data

Wednesday 18th February 2015 
Sterling has risen strongly this morning to fresh 7 year highs against the Euro. As you can see from the chart below, GBP/EUR rose from 1.3450 to 1.3560: 

Robust UK Employment figures boost Sterling 

The reason for the rise was 2 fold. Firstly we saw some very robust UK employment figures that were much better than forecast. Average earnings were higher than expected, and the number of people out of work in the UK fell by 97,000 to 1.86 million in the three months to December. Because the figures beat expectations, it boosted Sterling and caused the rate to rise.

Bank of England unanimous to keep rates at 0.5% 

Today the BoE minutes showed that all 9 members voted to hold rates at their currency level of 0.5. However although all nine members of the MPC voted to keep interest rates on hold, two members said the decision was "finely balanced", adding: "Given the outlook for inflation beyond the short term, there could well be a case for an increase in Bank Rate later in the year." This also pushed the Pound higher, and combined with the jobs data, Sterling has risen against most other major currencies this morning including the Euro. 

Will the Pound stay above €1.35 or drop back again? 

In recent weeks, we have seen GBP/EUR reach these levels several times, however each and every time it has always slipped back below this level within a day or two. The same could happen again, or this could be the time the gains are sustained and the rates stay above this level. It’s impossible to know what will happen. 

If you need to buy Euros however, you don’t want to lose out on the best rates since 2008. You could consider placing a ‘Stop Loss’ order which means if the rate does drop back, your currency is secured at a pre-agreed level. If the rate keeps rising however, you can still take advantage of any gains. 

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Sterling/Euro exchange rate forecast

Tuesday 17th February 2015 
In today’s report I’ll take a look at the Sterling/Euro exchange rate forecast, and also what data releases the rest of the week has in store and how they could affect exchange rates. Today the Pound has fallen against other currencies due to the lowest inflation figures on record.

Sterling/Euro 

The Pound/Euro rate has been repeating its recent trend of rising above the €1.35 mark, only to drop back away within days. This has happened again this morning, with the rate falling from €1.3550 to €1.3450 over the course of this morning. What’s been going on? 

Continued uncertainty over what is happening in Greece has continued to weaken the Euro, and that’s what keeps pushing the rate higher However with very low UK inflation numbers this morning, the Pound has fallen back away which is why GBP/EUR exchange rates have dropped. To be honest I think sooner or later, the Greeks will reach an agreement with the EU regarding its debts, and when this uncertainty is removed, the Euro could gain back some of its losses and bring GBP/EUR even lower. I personally don’t expect rates to stay at the €1.35 level for long. 

Supporting that view was this morning’s UK inflation figures. The rate of UK Consumer Prices Index inflation fell to 0.3% in January, its lowest level since records began in 1989. 

On the one hand, this does provide a respite for consumers in the UK and increase spending power so it’s good news. On the other hand however, it means interest rates in the UK aren’t going anywhere, and so the Pound has weakened off. 

(Low interest rates usually weaken a currency and it’s this fact that’s keeping the Pound in check.)

If you need the best GBP/EUR rates, or indeed need to convert any international currency, click here to make a free enquiry on the commercial exchange rates I can offer you.

 

What else could move exchange rates this week? 

Tuesday 17th February 2015  

This morning we had the latest inflation figures, and they were slightly worse than expected. This means it’s getting less and less likely that interest rates will be going up any time soon in the UK, and the Pound has fallen today by over a cent against the Euro. 

Wednesday 18th February 2015 

Today is an important one for Sterling, as at 09:30am we will see the latest unemployment figures, and the Bank of minutes. I expect the unemployment number to remain at 2.6%, but if it’s higher than this expect the Pound to fall and vice versa. The BoE minutes will be important as it will show if any of the Banks Monetary Policy committee voted to hike interest rates at their last meeting. I would expect this to show all members voting to keep rates on hold in light of the recent inflation numbers. 

Thursday 19th February 2015 

Nothing of note from the UK today, however the Eurozone has a monetary policy meeting and a consumer confidence release, that could affect GBP/EUR rates. The USA also has some important jobs and manufacturing numbers today, so we could also see changes in the Pound/Dollar rate. 

Friday 20th February 2015 

Today is another important one for Sterling as we have the latest UK Retail Sales numbers. I expect these to be around the 5.9% mark, and any deviation from this figure could cause the Pound to move against other currencies. Retail Sales figures are important as they are a good overall barometer of economic activity. 

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Pound surges to €1.3560 after Inflation Report

Thursday 12th February 2015 
We have seen the Pound surge higher today on the back of the Bank of England’s Inflation report. Pound/Euro rates climbed from 1.3410 to a peak of 1.3560, a new 7 and half year high, before settling back down towards €1.35: 

 

Pound/Euro rates up on Inflation report 

I’m actually quite surprised that the Pound moved so much this morning. In the report, the Bank of England governor stated that inflation in the UK could temporarily turn negative later this year due to the drop in the price of oil, and normally falling inflation would weaken a currency. However he went on to say that for the next few years, growth could be higher than expected at 2.9%. I think it’s this upward revision that caused the Pound to rise because of falling oil prices. 

It also said it sees little need to raise interest rates this year (again, something you would normally expect to weaken a currency) and could even cut them if inflation proves weaker than expected. However it seems that the markets interpreted the report as keeping on track an expected interest rate rise in about a year, in early 2016. 

Asked about concerns about Greece leaving the Eurozone, Mr Carney said that the risks were not as great as they were three years ago, but that a Greek exit would have an impact on the Bank's forecasts. 

What does this mean for Sterling/Euro rates? 

I think this is a temporary spike. We have seen the rate hit similar levels just this week; however they did not last long and the rate dropped away quite quickly. With the UK election likely to cause uncertainty and Sterling weakness, I think the Pound will struggle to go much higher this year. 

We also have the situation in Greece and the EU. On the one hand, further problems could weaken the Euro and caused the rate to climb higher. On the other hand, when the EU’s QE measures start to take effect, this could cause the Euro to regain strength and bring rates down. Also, don’t automatically assume more bad news from Europe will cause GBP/EUR to keep rising. Yes it could weaken the Euro, but as our largest trading partner, this could well drag Sterling down at the same time. 

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When should you fix your exchange rate? 

There are various options available, depending on which currency you are converting and the timescales you are working to. Why not get in touch with me to discuss these options and obtain a quote for your exchange. I can usually provide exchange rates much better than banks and other brokers, and by having a detailed chat about what you need to do, you can make an informed decision on what course of action to take and when to fix your rate. 

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Pound rises to €1.35 – a 7 year high vs the Euro

Tuesday 10th February 2015
Since my post a week ago, as you can see below, the exchange rate has recovered and risen back to its 7 year high of €1.35. 

As we will see in a moment, there are several factors that have caused the gains, including robust UK economic data giving the Pound a lift, the Euro remaining weak due to uncertainty over Greece, and stronger data from the United states which has also caused the Euro to weaken. In today’s report we’ll take a look at what has been happening, and whether the rate could go even higher in the coming months. 

Sterling/Euro for the last 7 days: 

UK data impresses and lifts Sterling high 

Of late we have seen strong UK economic data that has served to strengthen Sterling. Better than expected UK manufacturing data this morning helped, which follows on from very robust private sector surveys last week. Manufacturing, construction and services sectors all came in ahead of forecasts in recent days. Also, an economic think tank said Britain's economy was on track for its strongest growth in nearly 10 years in 2015, all of which has lent support to the Pound and helped it gain against other currencies. 

Attention will now shift to Thursday's Bank of England inflation report, in which we are likely to see updated growth and inflation forecasts, and will also help determine when interest rates will go up in the UK. However, those hoping the Pound will continue to strengthen should be cautions, as the upcoming election in May will likely create much uncertainty in the market and could well weaken the Pound brining exchange rates back down. 

Euro remains weak over Greek Euro exit fears 

David Cameron today held a meeting to discuss the possible impact on the UK of possible Greek exit from the Eurozone. 

There was agreement that the probability of Greece adopting a new currency had increased, however I still think that there will be an agreement between Greece and other EU governments to keep Greece in the single currency. 

While uncertainty persists however, the Euro is likely to remain weak and that’s keeping GBP/EUR levels at 7 year highs of €1.35. Read more about what's happening in Greece here on the BBC website. 

US Jobs data continues to impress, giving the USD strength and weakening Euro further 

Last week figures showed that the USA created 257,000 jobs last month, which was much higher than forecast. Furthermore, the number of jobs created in November and December was revised sharply higher. This means that last month was the 11th in a row in which more than 200,000 jobs were created, which is the best in over 20 years. 

The effect on the currency markets was US Dollar strength which caused GBP/USD to fall. This also meant capital flows out of the Euro into the US Dollar, which weakened the Euro and helped the GBP/EUR rate to rise. 

Do you want the best possible exchange rates? 

Get in touch with me today to discuss the rates I can offer and the contract types you have at your disposal to ensure you don’t lose out. The consultancy service I provide is free, and involves a chat over the phone regarding your requirements. I can then explain the various options and choices you have to ensure you make an informed decision when to fix a rate. 

When you decide to fix a rate I can provide you a quotation; the rates I provide are often up to 5% better than banks and other brokers can offer so the savings can be huge. 

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GBP/EUR drops, GBP/AUD rises, GBP/USD rises - exchange rates 2015

Tuesday 3rd February 2015

GBP/EUR falls into the €1.31’s 

I mentioned in yesterday’s post that the Sterling/Euro rate could be on the way down, and it’s happening quicker than expected. Today we have seen the rate fall a further cent bringing the mid-market level down into the €1.31’s. So, why has the Pound/Euro rate fallen? 

It’s to do with Greece. One of the reasons the rate has risen so well was fears the Greeks could exit the Euro after their recent election was won by the new Greek government, led by the left-wing Syriza party. Today, it seems they have now stopped calling for their debts to be written off, and instead are now proposing the standoff with its official creditors by swapping the debt for new growth-linked bonds. This has been taken as positive news for the Eurozone, and accordingly the Euro has gained strength, pulling rates lower. 

It is impossible to predict of course if the drop will continue, but if the ECB’s Quantitative Easing measures have the desired effect, we could see more Euro strength. Also consider that it’s now forecast that UK interest rates won’t go up until August 2016, so it’s hard to see where any Sterling strength will materialise from. 

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GBP/AUD rises to highest in over 5 years 

The RBA last night surprised the markets and cut the Australian interest rate by a quarter of a percentage point. This weakened the Australian Dollar, pushing rates to nearly $1.97 before selling back around the $1.95/$1.96 mark. This is now the best buying level in 5 and a half years, and you can see from the chart below the immediate spike when the announcement was made. 

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GBP/USD rises to $1.51 

This currency pair had recently been testing the $1.50 support level, but a host of poor economic data from the states today has weakened the Dollar, pushing rates a cent higher to $1.51. However as the US are likely to be the first western economy to raise interest rates, we could well still see the rate drop into the $1.40’s. 

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Sterling/Euro exchange rate forecast Feb 2015

Monday 2nd February 2015
Good morning and welcome to a new trading week. After a very volatile couple of weeks that has seen GBP/EUR hit 7 year highs of €1.35, things have stabilised somewhat, and this morning the rate has dropped back into the €1.32’s. With no significant data of note today, the only thing I can attribute the drop to, is a rumour that the Swiss National Bank will be unofficially targeting a EUR/CHF rate of 1.05. 

Why has the Pound/Euro rate fallen? 

This is significant as they recently ended their policy of keeping the rate at 1.20. They did this by selling CHF and buying Euros to keep the desired rate. These rumours mean the SNB could be buying huge volumes of Euros to keep the rate where they want it, and this demand for Euros has strengthened the single currency and made it more expensive, hence why this could be the reason GBP/EUR rates have fallen a cent this morning. 

Will the Pound/Euro rate go higher or lower in February? 

All in all, with rates to buy Euro still above 1.30 which is close to a 7 year peak, it’s a good time to take stock of any Euro requirements you may have in the coming months. With all the bad news from Europe now priced into the rate, I think we’ll struggle to see it get much higher. Furthermore if the QE measures recently announced by the ECB have the desired effect, we could see the Euro gain further strength and pull GBP/EUR rates lower. 

It’s also worth mentioning Greece – it looks like they won’t default on their debts, and for the time being will be firmly remaining in the Euro, so the initial uncertainty after their election has now subsided, and that’s also why GBP/EUR has stopped climbing. 

Do you want the best possible exchange rates? 

Get in touch with me today to discuss the rates I can offer and the contract types you have at your disposal to ensure you don’t lose out. The consultancy service I provide is free, and involves a chat over the phone regarding your requirements. I can then explain the various options and choices you have to ensure you make an informed decision when to fix a rate. When you decide to fix a rate I can provide you a quotation; the rates I provide are often up to 5% better than banks and other brokers can offer so the savings can be huge. 

Click here to make a free enquiry with me today. 

What could affect exchange rates this week? 

Below I have outlined what I think will move exchange rates this week. To discuss how this could affect your currency requirement in more detail, click here to send me a free enquiry. 

Tuesday 3rd February 2015 – The only UK data of note is PMI construction, which looks at the construction sector. It’s a relatively minor release but could affect Sterling. GBP/AUD could face a volatile day however with an Australian Interest Rate decision and following statement. GBP/EUR has recently seen very good gains with trading levels above $1.90. Staying with the antipodean currencies, the NZD could also be affected by Unemployment figures and a central bank speech today. 

Wednesday 4th February 2015 – Again only 1 release from the UK today; services PMI. As an indicator of the economic situation in the UK it can often affect Sterling. Sterling/Euro could also be affect today however by EU Retail Sales, and a policy meeting from the European Central Bank. Across the Pond we have a host of data from the States, including Employment, Manufacturing and Services figures. 

Thursday 5th February 2015 – today we have the Bank of England interest rate decision. I think this will be a non-event; rates won’t change from 0.5% in my view for another year. Elsewhere today we have an economic bulletin from the ECB, Retail Sales from Australia and Jobless claims along with Trade Balance figures from the USA. 

Friday 6th February 2015 – Today the UK releases its Trade Balance figures, which show the difference between imports and exports, and this release often creates some volatility for the Pound. There aren’t any releases from Europe today, but in the afternoon we have Jobs data from the USA. The Non-Farm payrolls in particular can really move the GBP/USD rate. The forecast is for 235,000 new US jobs to have been created, but the actual figure is often very different which could move the Pound/Dollar rate around 1.30pm. 

To discuss how the above could affect your currency requirement in more detail, or to obtain a quotation on the rates I can offer, click here to send me a free enquiry.