Bank of England could cause Pound to fall sharply

Friday 18th September 2015
FED leave interest rates on hold 

Last night the US Federal Reserve opted to keep interest rates at their low of 0.25%. There was a small chance that they would raise interest rates but this didn’t materialise. The FED Chair Janet Yellen cited the slowdown in China and emerging markets as the reason to keep the benchmark rate and this has weakened the Dollar making it a little cheaper to purchase. The rate climbed to around $1.5650 but has since started to slip away. They will raise rates at some point, probably early next year, so any rise in the rate should be taken advantage of, as it’s likely the GBP/USD will drop in the medium term.  Therefore if you need US Dollars, consider a 'Stop Loss' order to protect against a sharp drop. I've read forecasts from Barclays Capital with expectations of $1.43 by the end of this year!  

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Will Pound/Euro rates go up or down? 

The initial reaction to the FED move was for GBP/EURO to fall. There are 2 reasons this happened. Firstly, investors that had lodged funds in USD to take advantage of the possible rate hike moved them back to Euros, causing the single currency to gain. Also, the fact the USA have left rates on hold mean the UK are likely to do the same for many months, and this caused the Pound to weaken slightly. However, throughout today, the rate has clawed its way back up to around €1.37:



Rate cut by the Bank of England could send the Pound lower

The Pound/Euro exchange rate may move lower in the coming months however. A month or two ago, everybody thought the Bank of England would raise interest rates and this had caused the Pound to rise. A hike is now incredibly unlikely any time soon though, and in fact the UK may have to cut interest rates. 

The Bank of England’s chief economist has said that the bank may have to cut rates to combat low inflation, rather than raise. Inflation may not pick up in the second half of the year, and there are risks of fallout from emerging economies, he said in a speech. Should those risks materialise, a rate cut would be a viable option, he said. 

The UK economic recovery has stalled of late. Softening employment figures and weakening surveys on manufacturing and construction output suggested growth in the UK could slow in the second half of the year and inflation might not pick up as expected. Furthermore, problems in emerging markets could be a drag on UK growth and the headwinds from those economies were unlikely to abate any time soon. 

I personally don’t think a rate cut is on the cards, but at the same time there is very little chance of them opting to raise rates. This is likely to keep the Pound low for the coming months. Any clients looking to purchase Euros should therefore consider their options to ensure they don’t get a lower rate than is necessary. 

Get in touch to discuss your options 

If you need to buy or sell Euros, or indeed any international currency, then get in touch to discuss your options. I can explain the various ways you can protect yourself against the rate moving against you, and provide a quote for you to compare with your bank or exiting broker. I can typically secure exchange rates up to 3% better than banks and other brokers may offer, which could save you thousands of pounds if you are converting a large sum. 

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Pound falls slightly on poor Industrial and Manufacturing Production figures

Wednesday 9th September 
After gradually rising this week, the Pound has fallen slightly against the Euro and US Dollar today due to worse than expected UK data. Figures released earlier today showed that UK Industrial and Manufacturing production fell at its sharpest pace in more than a year. I warned on Monday that if the figures were worse than forecast Sterling could fall, and while the expected numbers were predicted to show slight growth, the actual numbers showed a decline of -0.4% & -0.8% respectively. As you can see from today’s GBP/EUR chart below, Sterling fell by around 1 cent against the Euro, however has since started to claw back its losses. (Click here to see my live currency chart)

Tomorrow key for whether Pound will rise or fall in the coming months 

At 12pm tomorrow, we will have a much clearer idea of whether Sterling is likely to rise or fall in the coming months, based on interest rate expectations. The Bank of England will announce its decision on interest rates, and they will almost certainly keep them on hold at 0.5%. Straight after the decision however, they will give a statement and release the minutes to the meeting. This will be key as it will show the views of the Monetary Policy Committee and what was discussed, and how many of the members if any voted for rates to rise. 

If these minutes give any hint that interest rates will rise early next year, then the Pound is likely to gain against other currencies. If they show that actually recent economic developments mean that rates will stay on hold for most of 2016, then expect the Pound to fall. 

How do I think the BoE decision could affect exchange rates? 

It’s impossible to predict currency movements of course, but I think that it’s quite likely the Pound could fall. I reach this conclusion because the current global economic downturn risks affecting the UK’s growth prospects, and raising interest rates too soon could hamper the steady recovery that Britain has been making relative to other major western economies. For this reason I think rates will stay on hold for around 12 months. This also means that investors are less likely to want to keep Sterling assets, and as a result Sterling exchange rates could fall. 

Of course, the BoE governor Mark Carney is highly unpredictable and it is impossible to second guess what effect his comments may have on the Pound. I’m quite sure however that tomorrow will see a change in the value of the Pound one way or the other. 

Are you worried about exchange rates moving against you? 

Regardless whether you are buying or selling foreign currency, the worst thing you can do is simply sit back and watch the market, hoping that the rate will move in a favourable way for you. The currency markets are highly unpredictable and this approach could cost you dearly. 

If you have a currency transaction to perform there are a number of ways I can be of help. Firstly, I can source rates of exchange that are very close to the published market level, and up to 5% better than banks or other currency brokers can offer. Secondly, with over 15 years’ experience in the FX Markets, I have a very good knowledge of what can affect exchange rates, and can help you to make an informed decision on when to lock in a rate of exchange. 

I would welcome the opportunity to speak to anyone that needs to get a quote on their exchange and explain how I can help you. Click here to send me your details and I will get in touch personally to discuss your requirements today. 

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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: 

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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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Pound rises on interest rate comments from BoE

Tuesday 14th July 2015
We have seen a sharp spike for Sterling this morning, after the Bank of England governor Mark Carney has said that the time for a UK interest rate rise is getting closer. This is despite figures this morning showing that inflation sits at 0%. This really shows how simple things like a few words from a central bank governor can affect exchange rates. Here's a look at how the Pound rose by over a cent against the Euro as soon as he made the comment at 09:53am:

Why did his comments cause the Pound to rise?

It's due to the fact that he has hinted interest rates may go up in the UK this year. Higher interest rates make Sterling a more attractive investment for investors due to the higher return on offer, and so the Pound has strengthened, pushing exchange rates up against other currencies. 

In recent times it's been things like Greece and elections that has affected the rate, but years ago things like interest rate movements and economic data were the main things that caused exchange rates to move. I'm sure there will be further developments tomorrow from Greece, and once that issue is resolved, focus is likely to return to traditional economic stats and things like interest rates.  

Getting the best exchange rates 

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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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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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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Inflation figures brings the Pound crashing down.

Wednesday 12th November 2014 
Good morning. Earlier this week I warned that today would be key for Pound/Euro rates, and that if the Bank of England inflation report forecasted low inflation, then Sterling could drop off. This is exactly what has happened, and despite an initial rise in rates following good UK employment figures, we soon was the rate drop by over 1 cent as you can see from the chart below: 

UK Employment gives the Pound a (temporary!) boost 

The day actually started well for the Pound, as figures showed that UK unemployment fell for the 18th consecutive month, beating expectations. The numbers also showed that one measure of average earnings growth beat inflation for the first time in five years. As the numbers were better than the markets were expecting, the Pound rose to above €1.28, getting near 6 year highs as you can see from the graph above. But the gains were short lived, as we will see in a moment…. 

Bank of England inflation report brings Sterling crashing back down. 

Within an hour of the spike to €1.28, GBP/EUR figure plummeted by cent to €1.27. The reason for this was inflation expectations. 

At 10:30am the Bank of England gave its inflation report. Inflation is key to when interest rates in the UK will rise. Higher inflation lends itself to higher interest rates, and the expectation of this has been driving the Pound up this year. 

However today the BoE governor Mark Carney stated that inflation could fall below 1% in the next six months, due to sluggish growth in the European economy, and other downward pressures. Governor Mark Carney also said he did not expect inflation to reach the targeted rate of 2% for three years. The Bank also cut its prediction for UK economic growth in 2015 to 2.9%.

All of this means that an interest rate hike in the UK is a long way off, and the Pound weakened accordingly. 

Is a weak Pound what the BoE wants? 

In recent posts I have suggested that the strong Pound is not favoured by the Bank of England. It affects our exports and could harm our recover. For this reason I have warned recently that the BoE could take the opportunity to weaken the Pound if they can, and today that’s exactly what we’ve seen. Just a few comments from the BoE governor and the Pound has fallen again, repeating it’s trend of climbing to around €1.28 before dropping back down. 

Getting the best exchange rates 

As you can see from my market report today, there are lots of risks to Sterling, and many different things that are pulling the rate up and down. Getting the best rates is partly getting your timing right, and also having a good currency broker to inform you what is happening in the market, and to help source you a better rate of exchange than the banks. 

This is how I can help you with your currency exchange, so if you need to convert once currency to another, then get in touch with me for a chat about how I can assist you and the rates I can achieve. Even if you already have a broker, it can do no harm to compare our rates as even a small difference in your exchange rate can represent a saving of thousands of Pounds when converting a large sum. 

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What could affect Sterling/Euro rates this week?

Monday 10th November 2014 
Good afternoon. It’s been a very quiet start to the week with no economic data releases of note. The Pound/Euro rate remains in the mid €1.27’s, and Pound/Dollar rates have dipped into the $1.58’s. 

As usual for a Monday, below I’ve listed the weeks data releases that I think will affect exchange rates. It’s a very quiet week all in all, with the most interesting release being on Wednesday when we see the latest UK unemployment numbers, along with the Bank of England (BoE) inflation report. This is important as inflation forecasts will have an effect on when the UK may raise interest rates. If inflation is forecast to remain low, expect the Pound to weaken. If inflation looks like it is on the rise again, the Pound could well strengthen. 

I personally think GBP/EUR will remain in its recent range of 1.26 to 1.28 in the coming weeks. Those buying Euros should consider locking a rate in now while it’s close to the best in 6 years. I can’t see anything on the horizon that will push the rate higher. 

If you need to perform a currency transaction, converting Euros to Pound, Sterling to Euros, or indeed need to get the best exchange rates when converting any international currency, then why not get in touch to see what rate I can offer. I can source rates up to 5% better than banks of other financial institutions can offer, and this can represent a significant saving if you need to convert a large sum. 

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This week’s economic data releases that could affect exchange rates. 

Tuesday – Another very quiet day, with the only data of note a speech by the Reserve Bank of New Zealand governor, along with a report from them about financial stability, so we could see some volatility in GBP/NZD rates. 

Wednesday – I think today will be the most important of the week for the Pound. We have the latest Unemployment numbers, alond with the Bank of England inflation report. This is important as the jobs numbers are a reflection of the economy, and the inflation report could give some insight into the future movements for UK interest rates. 

Thursday – Nothing of note from the UK, but the European Central Bank issues its monthly report, so GBP/EUR could be affected. Over in the USA we have Jobless claims numbers, and from Canada we have a BoC review. 

Friday – Yet again nothing of interest from the UK. The EU releases it’s latest inflation numbers and Gross Domestic Product (GDP) numbers, so GBP/EUR will be driven by these releases today. Over in the USA we have Retail Sales numbers and a consumer sentiment survey, both of which could affect GBP/USD rates. 

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 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? 

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

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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. 

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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 drops from new highs after Bank of England minutes

Wednesday 23rd July 2014 
Since my last post on Monday, the Pound/Euro rate had been slowly creeping up until today, due to weakness in the Euro. In fact this morning rates touched a new high of €1.27, but as has been the case of late the gains were not to last… 

Bank of England minutes causes Pound to fall 

This morning at 09:30am the Bank of England released its recent minutes showing what was discussed and how they voted when interest rates were recently kept on hold. As you can see from the chart below, GBP/EUR edged up to €1.27 just before the announcement. This was because there might have been some of the 9 member committee that had voted for rates to rise. 

 
As it happened, all 9 members voted to keep rates on hold, signalling that rates are likely to remain at 0.5% for some time to come. Even though unemployment is dropping and the economy is growing, I think rates will not go up anytime soon until wage growth catches up. If they raise rates too quickly it could destabilise the recovery. You can read a detailed report on what happened today here on the BBC website.

Will Pound go up or down against Euro?

For the reasons outlined above, I can’t see the Pound gaining much more strength in the short term, so those that are looking for the best exchange rates should consider fixing now while it’s so favourable. By holding out hoping for more gains, you will probably find there is more to lose than there is to gain. 

For those converting currency back to Sterling, get in touch for a free consultation on your options. The Pound will get stronger eventually as we get closer to a rate rise, but there are ways to protect against the market moving against you such as Forward contracts, Stop and Limit orders. 

To find out more about the excellent exchange rates I offer, the contract types available, or simply to have a chat about which way the currency markets are going then click below to send me a free enquiry today. 

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Sterling falls slightly on UK mortgage numbers

Tuesday 27th May 2014 
The UK and US markets opened today after being closed yesterday for the Bank Holiday. Initially things looked good for the Pound, rising against both the Euro and US Dollar as soon as the market opened at 8am. 

The reason for the initial gains was the Deputy BoE Governor Charlie Bean's comments at the weekend, where he said that the bank's plan to raise rates gradually means the first hike could come earlier than may otherwise have been the case. (Higher rates mean a higher return, and so the Pound gained a little strength.) The BoE governor Mark Carney speaks this evening, so any surprise comments from him could also have an effect on GBP/EUR rates, and is probably the most key event of the week in my opinion. 

In stark contrast, the European Central Bank president Mario Draghi said on Sunday that "more pre-emptive action may be warranted to ward off deflation". This hints to the markets that they may well pursue some sort of stimulus measures, which if they do could weaken the Euro. 

Pound falls after Mortgage Approvals 

Data is thin on the ground today, so the only thing the market had to go on was this morning’s mortgage approval numbers. The figure was several thousand below what had been expected, and this took the steam out of Sterling’s run, lowering the value of the Pound by around 0.3%/0.4%. 

What next for exchange rates? 

Focus is still on what the central banks of the UK and EU will do in the coming months. As explained above, there is lots of speculation UK rates are going up at some point, and that the ECB may well do the opposite. This has been steadily priced into the market over recent months, and is the reason GBP/EUR rates are close to an 18 month high. 

We will know more about any likely action in the coming weeks, and this is likely to move GBP/EUR rates from their currency position. 

If you need to buy Euros, or indeed convert Euros back to Pounds, then the market at the moment is treading a very fine line, and could move either way in the next few weeks. If you have a currency transaction to perform, it would be advantageous to get in touch with me about which way the market is going, and the options you have available to ensure you get the best rate and not get caught out by adverse market movements. 

It’s free to make an enquiry, doesn’t obligate you, and I can discuss your requirements and provide you a quote to compare with your bank or existing broker. 

Click here to get in touch for a quote, or to discuss the currency market.

Economic Data Releases this week that might affect exchange rates 

Wednesday 28th May 2014 

We are very light on UK data today, but the markets will be reacting to last night’s speech by Bank of England governor Mark Carney. In the Eurozone we have the latest German Unemployment figures, in addition to EU wide measure of Consumer Confidence and Economic sentiment so GBP/EUR could be affected. 

Thursday 29th May 2014 

The only UK data of note comes late in the day, with consumer confidence measures at midnight. The majority of the eco-stats being released today are from the United States: GDP figures, Jobless Claims, Home Sales and Consumer confidence. So there’s lots today that could well affect GBP/USD rates. 

Friday 20th May 2014 

Again nothing of note from Britain. The only EU data worth noting is Retail Sales from Germany. It’s a very good indication of their economy as a whole, and being the largest in the EU it can sometimes affect GBP/EUR rates. Busy day in the USA again today, Income & expenditure figures, Inflation data and consumer Sentiment. 

Click here to get in touch and discuss how market data could affect your currency requirement, or to get a free no obligation quote. 

Sterling/Euro exchange rates likely to move this week

Tuesday 22nd April 2014 
Good afternoon, and welcome back to regular currency updates after the Easter break. 

It’s been a quiet start to the week with no major data releases, and Sterling/Euro remains quite close to €1.22, with Sterling/Dollar hovering a little above $1.6800. 

Will Pound/Euro rates go up or down this week? 

There are 2 key things happening this week that I think will affect exchange rates. I’ve listed the week’s data at the bottom of today’s post, but I will also go into a little detail about the main releases that I think could change Pound/Euro rates. 

In effect we have the central banks of the UK and Europe pulling in different directions, and this will likely have an impact on which way the Pound/Euro currency pair could go in the coming weeks and months…. 

Bank of England could cause GBP/EUR rates to fall 

Tomorrow morning we have the latest minutes from the BoE meeting, and this will show what was discussed with regards to interest rates. I expect they may well hint that they will now be looking at a broad range of factors that will determine when they will raise interest rates. 

If this hints that rates won’t rise until well into 2015, then the Pound may weaken off and erode the gains we saw last week. 

European Central Bank could cause GBP/EUR rates to rise 

On Thursday, the European Central Bank President Mario Draghi is scheduled to give a keynote speech. He recently made clear the euro's strength is a possible trigger for the central bank to ease monetary policy. Very weak inflation in the euro zone, due partly to the strong exchange rate, has raised pressure on the ECB to further loosen monetary policy to stimulate growth. 

In the past few weeks Draghi has brought the currency into focus and warned that any further strengthening could lead the euro zone's central bank to use unconventional tools such as asset purchases. If he expands on this further, the Euro could weaken and GBP/EUR rates could rise. 

So as you can see, we could see rates move either way this week due to the above. To discuss your requirements in more detail, or if you would like a quote on the best exchange rate I can get for you, click here to send me a free enquiry today. 

The rest of this week’s economic data 

Wednesday 23rd April 2014 

The important data today is the Bank of England minutes, which show what was discussed in their recent interest rate meeting. They could well hint that a rate hike is some way off, which would weaken the Pound and cause exchange rates to drop. 

We also have Inflation data from the Eurozone, Home Sales data from the United States, and an Interest rate decision from New Zealand. I think they will raise rates, which will cause GBP/NZD to fall if they indeed choose to do so. 

Thursday 24th April 2014 

There is nothing of note from the UK today, but as I mentioned in my introduction, we have a speech by the ECB president Mario Draghi. He could hint at monetary easing, which would weaken the Euro and cause GBP/EUR rates to go up. 

Stateside we have Jobless claims numbers, so GBP/USD could be affected. 

Friday 25th April 2014 

We end the week with UK Retail Sales and mortgage approvals, and a consumer sentiment survey from the USA. 

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Pound/Euro exchange rate forecast 2014

Wednesday 26th February 2014 
The Pound remains quite well supported against other major currencies, however continues to fail to push any higher. This is due to the fact UK interest rates won't be rising any time soon, and also a resurgent EU economy. If EU growth continues to gain ground, we could see the Euro start to strengthen and become more expensive to buy, which could push Pound/Euro lower again. 

For those with Sterling to convert, we are currently still close to a 1 year high against the Euro, and a 5 year high against the US Dollar. 

Yesterday figures published by the British Bankers' Association (BBA) that measure the number of home loans issued were better than expected, supporting the Pound at close to 5 year highs on a trade weighted basis (mortgage approvals are seen as a leading indicator of the UK economy). 

What could affect exchange rates for the rest of this week? 

Tomorrow (Thursday) we have some key data from the Eurozone, and as the recovery in the EU is starting to quicken, better than expected figures could cause the Euro to strengthen and GBP/EUR rates to dip. The data includes German unemployment & inflation data, EU wide Economic and Industrial confidence measures. 

Friday could be a key day for where Sterling moves in the coming weeks. The only actual economic release is a measure of consumer confidence. However at 15:30pm we have a speech by the Bank of England governor Mark Carney. 

There are some further inflation and unemployment figures due from the EU at 10am. Again this could affect GBP/EUR rates depending if the figures are better or worse than forecast. 

Also on Friday there are lots of economic figures from the United States that could affect Pound/US Dollar rates. We see Gross Domestic Product (GDP) figures, Consumer Sentiment, and a measure of Home Sales. 

Click here to discuss how economic data could affect your exchange rate. 

Will Mark Carney try to weaken the Pound?

Much of the Pound’s strength of late can be attributed to the fact the economy is performing well, and many think interest rates will rise next year – this has been keeping Sterling strong. It will be interesting to see what the BoE governor Mark Carney has to say in his speech on Friday afternoon, and if he mentions the subject of interest rates. 

Put simply, if his comments support the view of an interest rate hike in the next 12 months, the Pound may rise. If however his comments are seen as negative for Sterling – e.g. he hints that a rate hike is some way off – we could see the Pound drop away. 

In my view there is a real risk of this happening, because we have already seen the Bank of England have already warned that they do not want a strong pound due to the fact it will hurt our exports and therefore the UK’s economic recovery. So Carney may take this opportunity to talk the Pound lower. 

Should you buy Euros now or wait to see if rates improve? 

There is unfortunately no way to predict if rates will rise or fall, however there are ways to protect against things getting worse for you. If you need to buy Euros, then the current rate is close to the best in 12 months, and has failed to get any higher in the last few months. 

We could see the rate increase further; however any doubt over the UK’s economic recovery could quickly mean we see rates drop again. If you need to buy Euros throughout 2014, then a good strategy is either a Forward contract or a Stop Loss Order. 

A Forward contract allows you to fix the current exchange rate for up to 12 months into the future, but you only lodge 10% of the total you want to convert. The remaining 90% you send when you want your Euros to be transferred. This is a good way to protect against the rate dropping, removes all risk from your transaction and allows you to budget effectively. It does not however let you take advantage of any gains should we see rates go higher. 

If you want to risk holding out for an improvement, then it is wise to place a ‘Stop Loss’ order. This sets a lower limit, and if the rate drops below this we automatically buy your currency for you. In this way you can still take advantage of any gains, however you also have a ‘worst case scenario’ or safety net, so that if we see a sudden drop you don’t lose out more than necessary. 

Click here to find out more about Forwards/Stop Loss orders

Would you like to achieve the best exchange rates? 

I can offer exchange rates very close to the ‘mid-market’ rate you see published on this site, which is up to 5% better than your bank can offer you. In addition to exceptional rates of exchange, I can provide a consultative service which allows you to discuss your requirement with me over the phone. In this way you can discover all the options available to you such as Forward contracts and Stop Loss orders, and make an informed choice with regards to when to fix your exchange rate. 

Getting in touch costs you nothing, doesn’t obligate you in any way, and the savings you make could be very considerable indeed. 

Click here to make a free enquiry with me today. 

Alastair Archbold

Pound falls on low inflation numbers

Tuesday 18th February 2014
We have seen Sterling lose ground today after lower than expected inflation numbers were released this morning. As you can see from the chart below, GBP/EUR rates slipped around 0.5% but levels remain in the mid €1.21's.

So why exactly does lower inflation cause the exchange rate to drop?

The UK's inflation rate, as measured by the consumer prices index, fell to 1.9% in January. The rate fell below the Bank of England's 2% target for the first time in more than four years. While this is good for business's and individual consumers, it's not good news for Sterling, and this is to do with interest rates. 

The fall is likely to underline the Bank of England's message that there is no rush to raise interest rates, as they would usually only do this to combat high inflation. So as the number was lower than expected, analysts believe this has pushed a rate hike further into the future. It has been the speculation of higher interest rates that has been the main reason for the recent rise in rates, so as the data changes, as does the value of the Pound. The net result is Sterling having lower value and rates falling. 

Is this a temporary drop? Will rates go back up again?

Tomorrow is a very important day for the Pound, and will likely have a big impact on where exchange rates go in the coming weeks. 

At 09:30am tomorrow we will see the latest UK Unemployment figures. The number will probably be just above 7%, but if it's lower than this the Pound may regain some of today's losses. 

Also at 09:30am we see the Bank of England minutes, which show the vote and what was discussed a few weeks ago when they left rates and QE on hold. These will be of importance because if the votes and comments show they discussed raising rates, the Pound may rise. 

Of course if unemployment is 7.1% of higher, or of the BoE minutes show a consensus rates don't need to go up, then expect the Pound to lose more value and rates to drop further. 

Exchange rates at multi-year highs

In my recent post I outlined some major currency pairs and how good exchange rates are at the moment. It seems the recent trend of a spike in rates followed by a drop is continuing, so if you need the best exchange rates, why not get in touch to discuss your requirements.

I can explain what is moving the rate, provide you a quote to compare with your existing bank or broker, and you can make sure you are getting the best possible rate. 

It costs nothing to make an enquiry, carries no obligation, and the savings can be considerable. 

Click here to send me a free no obligation enquiry. 

I look forward to hearing from you.

Alastair Archbold