Sterling continues to fall against the Euro

Wednesday 26th August 2015
Following ‘Black Monday’ there continues to be volatility with Sterling exchange rates. Looking at Sterling/Euro in particular, the recent 8 year highs of €1.44 are now a distant memory. Rates have plunged in the last few weeks, and despite recovering a little yesterday, it fell again last night at is now stable around the €1.36 level as you can see from the chart below:

Further volatility expected on currency markets 

This all began Monday when a global rout in the stock markets was prompted by a huge share sell off in China. Fears of a global slowdown intensified in recent days after China devalued its currency and data pointed to further signs of weakness, triggering volatility in global stock and currency markets. 

Interest Rates 

China cut its interest rates this week in an effort to avert disaster, and investors are now questioning whether the Federal Reserve in the USA and the Bank of England in the UK can change interest rates. Much of the Pound’s strength in recent months was on expectations interest rates would rise later this year. Even the recent Bank of England inflation report gave investors’ confidence rates would rise within 6 months, boosting the value of Sterling. However with the latest global developments, it’s now likely to be late next year, or even 2017 before rates rise from their current 0.5%. As a result the Pound has weakened. 

Experts expect market volatility to continue until at least next month when the USA decides what to do on interest rates. Just a few weeks ago, most thought they would raise their interest rate, but now it’s more likely up to a year away. 

Safe Haven Currencies 

An unlikely benefactor of the recent turmoil has been the Euro. Now that Greece is out of the news following an agreement to provide an €86bn bailout, the Euro has gained strength as I had predicted it would do for some time. Their stimulus programme seems to be working, and actually the EU economy is looking more and more robust. This has meant that due to the global turmoil, investors view the single currency as a safe place to park their funds while avoiding stock market turmoil and this strength is also a factor in the GBP/EUR rate falling away sharply. 

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Whether you are buying or selling property abroad, a business that deals in foreign currencies, or simply need to top up a foreign bank account, I can help. I have been a currency broker helping private and business clients get better rates than their banks or existing brokers offer for more than 10 years. 

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Alastair Archbold

Huge exchange rate volatility GBPEUR, GBPNZD, GBPAUD, GBPUSD

Monday 24th August 2015 
It’s incredibly volatile on the currency markets today. Just look at what has happened with Sterling/Euro rates, falling from 1.38 into 1.34's:
  

 
When I opened the trading floor this morning at 8am, GBP/EUR was at 1.38 where it ended on Friday. We have seen the rate drop throughout the day, and at 2.15pm it plummeted to as low as 1.3455 before recovering back into the €1.35’s. This is a huge drop and other currency pairs are seeing extreme volatility, due to global stock rout and economic uncertainty. 

The FTSE 100 has lost 10%, as investors dumped riskier assets and flocked to currencies seen as safe havens on fears about a slowdown in the Chinese and global economies. The Euro has been a huge benefactor, as usual safe havens like Sterling and the US Dollar are suffering. This is because the global slowdown means interest rates are no longer likely to go up in the UK or US any time soon. 

As the Euro gains significant strength, commodity based currencies like the Australian Dollar, New Zealand Dollar and Canadian Dollar continue to weaken as oil prices and other commodities continue to fall in value. 

Click here to view live charts for all currency pairs.

Sterling/Dollar has gone from $1.56 to $1.58 just today, as the Dollar weakens due to the global turmoil. Just look at some of the movements we've seen during trading today:

GBP/USD rises to $1.58:

GBP/NZD has risen by 10 cents in the last half an hour:

 

GBP/AUD rises from $2.16 to $2.22:

 

A panicked and interesting day on the currency markets. 

If you have a currency transaction to perform, then get in touch to find out more about the currency services I offer. From exchange rates up to 5% better than the bank, to tools such as 'Stop Loss' and 'Limit' orders that can protect you against volatility like we've witnessed today, you could save thousands by simply getting in touch for a quote and a chat about how my service works. 

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Why has Pound/Euro fallen into €1.38's?

Friday 21st August 2015
Since my last post on Tuesday, Sterling/Euro rates have fallen from €1.42 into the €1.38's, caused by the Euro gaining strength. 

There are several factors that have caused the single currency to gain. Firstly the news that Greek Prime Minister and Syriza leader Alexis Tsipras stood down on Thursday, paving the way for new elections. This seems to have been taken as a positive move for the Euro and last night the rate starting slipping away. This continued this morning when German and European inflation numbers were better than expected, coupled with worse than expected UK Public Sector borrowing data. 

As you can see from the chart below, in the last week the rate has been in steady decline. With a resolution to the Greek debt crisis, and decent EU economic data, this could well spell the end of the record 8 year high GBP/EUR exchange rates we have seen recently. It’s good news however for those selling Euros, with a typical conversion of €250,000.00 netting £4500.00 more in just a few days. 

China Slow down affects currency markets 

Elsewhere, the slowdown in China continues with stock markets there dropping again. This affects other global currencies because China is such a huge economy. Countries like Australia that export to China are suffering, and so the Aussie Dollar has weakened recently. The US Dollar benefits and gains strength as investors become risk averse and seek safe haven currencies. 

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GBP/EUR falls 4 cents in 1 week, before recovering to €1.42

Tuesday 18th August 2015 
It’s been an interesting week in the currency markets since my last post a week ago. (Apologies for the lack of updates recently; my girlfriend managed to break her leg quite badly so I’ve had other priorities!)

In the last week we saw Sterling weaken significantly, pulling GBP/EUR rates down from €1.42 back into the €1.39’s. Today however we have seen a significant recovery, and during trading today we have seen the rate shoot back up over €1.42. After a look at the last 7 day GBP/EUR chart I’ll explain what has been causing the volatility. Sterling/Euro over the last 7 days: 

What caused the Pound/Euro rate to fall into the €1.39s? 

It was a combination of poor UK economic data, positive data from Euro, and a 3rd €86bn bailout finally agreed for Greece. 

Let’s start with the UK numbers. Sterling fell sharply last Wednesday as numbers showed that wage growth had slowed, reflecting a slowing of the UK’s economic recovery. In turn the numbers means it’s more and more unlikely that the Bank of England will raise interest rates this year. Investors duly sold the Pound, causing it to weaken significantly. GBP/EUR fell 4 cents in a 1 week period, which goes to show just how quickly exchange rates can change in the currency markets. 

It was a different story in Europe, with figures showing that the EU economy grew by 0.3%. Even Greece managed 0.8% growth, and it seems that the ECB Stimulus program seems to be working. The Euro gained strength as a result and became more expensive to purchase. 

Finally, Greece was back in the headlines but this time for the right reasons. The 3rd bailout of €86bn has finally been agreed after months of negotiations, which regular readers of my blog will be well aware of. Greece’s debt problems have been one of the main factors weakening the single currency recently, so with the issue finally sorted, the Euro gained against other currencies. All of the above caused the decline in GBP/EUR pushing rates below the key €1.40 level. 

GBP/EUR pushes back above €1.42 

Pound/Euro rates fought back today however. When I returned to work this morning the rate was sat around €1.4050. At the time of writing, we have seen the pair rise by more than 1% to rest just above the €1.42 mark. This morning the latest UK inflation numbers were released and were better than expected. While still very low at 0.1% and well below the Bank of England’s target of 2%, it does mean that we could now see a UK interest rate hike sooner than thought. 

One of the BoE’s Monetary Policy Committee members Ms Forbes has said that a rate hike took between one and two years to take full effect, and as a result, rates would need to rise "well before" inflation hit the Bank's 2% target. 

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What could affect exchange rates this week?

Monday 10th August 2015 
Good morning. As I outlined in Friday’s post, Sterling has fallen against other currencies in recent days. Today I’ll list out the main economic data releases that are likely to cause volatility in exchange rates. After last week’s interest rate speculation for the UK and USA, at the time of writing GBP/EUR exchange rates are a little above €1.41, and GBP/USD rates are in the mid $1.54’s. You can view live rates updated every few seconds including interactive charts by clicking here. 

Remember that if you’re looking for the best deal on currency, in addition to my market updates here on the blog, I can also provide you a quote for your exchange that is likely to be significantly better than your bank or existing broker may offer. Click here to get your quotation today. 

What could affect Sterling exchange rates this week? 

As usual for a Monday, I have listed below this week’s main fundamental data releases that I think could affect exchange rates. If you have a currency transaction to perform and would like to get a quote or simply discuss what could affect the exchange rates you’re looking at in the coming weeks, contact me today by clicking here. 

This week's economic data releases

• Monday 10th August 2015 – Today's is relatively quiet on the data front. The only UK release of note is Retail Sales data from the British Retail Consortium released at midnight. Retail Sales are a good barometer of overall economic activity so can affect the Pound. Elsewhere, one of the US Federal Reserve’s members gives a speech at lunchtime. Any further indications of an interest rate hike could cause GBP/USD rates to fall further. 

•  Tuesday 11th August 2015 – Nothing of note from the UK, but GBP/EUR could be affected by an EU wide economic sentiment survey. Germany also releases its economic sentiment measures along with Wholesale prices. Because Germany is the EU’s largest economy, its figures can affect the value of the Euro. 

•  Wednesday 12th August 2015 – Today is the most important one for the Pound, as we have several releases detailing unemployment figures at 09:30am. Unemployment is expected at 5.6%, so any deviation from this figure will affect Sterling exchange rates. Later in the day we have House price data from the Royal Institute of Chartered Surveyors. Elsewhere Europe has Industrial production figures. The US delivers its monthly budget statement, so all in all lots today that could affect the currency markets. 

•   Thursday 13th August 2015 – Nothing from the UK today, but GBP/EUR could still be affected by German Inflation data, and a European Central Bank Policy meeting. The USA and New Zealand both release their latest Retail Sales figures. 

•  Friday 14th August 2015 – Another busy day from Europe, with Gross Domestic Product figures from Germany, Italy and the EU as a whole. There are also inflation numbers released from Europe today, so a busy morning for the single currency. We end the week with US Industrial Production figures. 

Looking for the best deal of foreign exchange? 

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Sterling falls after Super Thursday

Friday 7th August 2015
Super Thursday was anything but for the Pound, as a dovish tone from the Bank of England caused a large sell off for Sterling, pulling GBP/EUR exchange rates lower. The decline has continued this afternoon so in just 48 hours exchange rates have dropped from from €1.44 to nearly €1.41: 

Super Thursday pushes GBP/EUR lower 

On Thursday, the Bank's Monetary Policy Committee voted to keep interest rates at their current historic low of 0.5%. What surprised many was that only 1 of the 9 members voted for a rate hike. The markets had been expecting at least 2 or more to vote for a hike. 

This means that earlier in the week expectation was for interest rates to go up at the end of the year. Deputy governor Ben Broadbent said the Committee had no specific time in mind for a rise and comments by governor Mark Carney had been misinterpreted. 

Following yesterday’s news it now looks like mid 2016 is more likely. Investors sold the Pound on the back of the news, pulling the Pound lower against other currencies. I said that exchange rates were likely to change yesterday and that has proved to be the case. 

Pound/Dollar rates fall on US Jobs data 

GBP/USD fell yesterday after the Bank of England’s releases, and today the USA posted much better than expected jobs data, which has strengthened the US Dollar further and pulled GBP/USD rates even lower: 

Looking for the best deal of foreign exchange? 

If you want to get the best possible exchange rates, then contact me for a quote. I provide commercial rates of exchange to private and corporate clients looking to trade £5k+. You can send me a free enquiry using the link below, and I will get in touch personally to discuss your requirements, explain how the service works, and discuss the different options you can consider to help you get the best rate of exchange possible. 

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Exchange Rates volatile due to interest rate speculation

Wednesday 5th August 2015
There was some movement on both GBP/EUR and GBP/USD exchange rates overnight, and it’s interest rate speculation again that’s driving exchange rates. After a quick look at the charts I’ll explain what’s going on. As you can see below Sterling/Euro rates have climbed to €1.4350 and Sterling/Dollar rates dropped a cent overnight: 

Sterling/Euro

Sterling/Dollar

GBP/USD - US Interest rates affect exchange rates 

Last night, one of the US Federal Reserve members, Dennis Lockhart, who is one of the people who decides on interest rates, said that it would take "significant deterioration" in the U.S. economy for him to not support a rate hike in September. This means that chances are increased that the USA will be the first major western economy to start pushing rates back up. The hint of higher interest rates tends to strengthen a currency due to the higher return on offer for investors. 

On the comments, the USD gained strength and pulled GBP/USD Rates down. As investors moved funds from the Euro into the Dollar, the single currency weakened accordingly, and as you can see from the graphs above, the GBP/EUR rate moved inversely to cable, rising by over 1% to €1.4350. 

On Friday, we see some very important jobs data from the USA at 13:30pm, and if these numbers beat forecasts, expect the decline in GBP/USD rates to continue. I am still of the view that GBP/USD rates won’t stay above $1.50 for very much longer. 

GBP/EUR – Thursday very important for exchange rates 

With many analysts now expecting the US to raise interest rates next month, many are also starting to look at whether the UK will do the same. Tomorrow (Thursday) is a very important one for the Pound. Here is the data we’re going to see from Britain: 

‘Super’ Thursday’s eco-stats include: Manufacturing Production, Industrial Production, a GDP growth estimate, the BoE decision on interest rates, the BoE Inflation report, a Statement from the BoE’s Monetary Policy Committee, and a Speech by the BoE governor Mark Carney. 

Phew. There’s a huge amount of data to chew on tomorrow, and taken as a whole will paint a very clear picture on what direction the UK economy is taking. I think that at least 2 of the 9 member MPC committee will vote for an interest rate hike, and if this happens and the other data is good, expect Sterling to gain in strength. We could well see a decent rise for Sterling exchange rates if the UK economic picture is a robust one. 

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If you need to convert over £5000.00 and have your currency transferred to a bank account, then get in touch with me by clicking here. I can provide you a quote and you can see how much you can save compared to your bank or existing broker. We’re fully authorised by the FCA in the UK so you can trade with us knowing your funds are safe.

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What could affect exchange rates this week?

Monday 3rd August 2015 
Good morning and welcome to a new week of updates about exchange rates. In today’s post, I’m going to take a look at the economic data releases for the week ahead that could affect exchange rates. Currently GBP/EUR sits a little above €1.42, and GBP/USD sits just below $1.56. 

What could affect Sterling exchange rates this week? 

There are lots of things that can change the value of a currency. Regular readers will know that in recent times it’s been events in Greece, and political situations like the Scottish referendum and UK election. Usually however, it’s fundamental data such as unemployment figures and interest rates. 

We already know well in advance what is going to be released using calenders such as this one, and analysts give their forecasts as to what they think the results will be. These forecasts are already priced into the value of a currency, so what’s important is not necessarily whether the figure is good or bad for an economy, but whether the figures are better or worse than expected. For example UK unemployment could fall, but that could still weaken the Pound if it didn't fall as much as had been expected!

Below I have listed this week’s main fundamental data releases that I think could affect exchange rates. If you have a currency transaction to perform and would like to get a quote or simply discuss what could affect exchange rates in the coming weeks, contact me today by clicking here. 

This week’s data releases 

Monday 3rd August 2015 – This morning we have already seen Inflation numbers from Europe and Germany which were better than expected, which strengthened the Euro and pulled GBP rates down slightly. This afternoon those with an eye on GBP/USD rates should watch for the US Manufacturing PMI Numbers. They are expected to show a reading of 53.5 so a figure higher than this could cause Sterling/Dollar to drop. 

Tuesday 4th August 2015 – The main UK release today is PMI Construction which shows business conditions in the UK construction sector and can affect the value of Sterling. Elsewhere the main news is from down under. Australia has Trade Balance figures and an interest rate decision. They’ve already cut rates twice this year to 2% so I don’t expect any further cut, but if they do expect GBP/AUD to rise. In New Zealand we have unemployment data figures that could affect GBP/NZD rates. 

Wednesday 5th August 2015 – GBP/EUR today could be affect by data from Europe – Markit Services and Retail Sales. The latter is expected to show a rise of 1.9%. If it’s lower than this, Pound/Euro could rise and vice versa. Over in the United States we have Inflation, Manufacturing and Services data, in addition to Employment numbers and the latest Trade balance figures. Lots to chew on for investors, which could affect GBP/USD rates. 

Thursday 6th August 2015 – Today is the most important one for Sterling, as we have a lot of data for Britain – Industrial Production, an NIESR GDP Estimate, and the all-important Bank of England meeting. It’s highly unlikely there will be a change to interest rates, but the minutes will make an interesting read, and also the Speech by Mark Carney, BoE governor at 12:45pm is also very important. If the minutes or the speech contain any comments hinting at an interest rate rise later in the year, expect the Pound to rise against other currencies. 

Friday 7th August 2015 – The UK is a little quieter today, but there are Trade balance figures released at 09:30am. Germany also has Trade balance figures, so GBP/EUR could be affected today. Over in the USA we have Jobs data including the Non-Farm Payrolls numbers. This usually creates quite a bit of volatility for GBP/USD rates as the figure often differs significantly from estimates. GBP/CAD could also have a choppy day today due to Canadian Unemployment figures and inflation numbers.  

Looking for the best deal of foreign exchange?

If you want to get the best possible exchange rates, then contact me for a quote. I provide commercial rates of exchange to private and corporate clients looking to trade £5k+. You can send me a free enquiry using the link below, and I will get in touch personally to discuss your requirements, explain how the service works, and discuss the different options you can consider to help you get the best rate of exchange possible. 

Click here to discuss your currency requirements today.