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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Why has the Pound/Euro rate fallen?

Thursday 23rd July 2015
Sterling/Euro rates have been threatening to fall for a week now, and today the market took a plunge pushing GBP/EUR rates down into the €1.41’s. After a quick look at the chart, I’ll go into more detail regarding what caused the rate to fall, and whether the Pound will go back up against the Euro. 

Why has the Pound fallen against the Euro? 

The first reason was Greece, which is becoming a regular and tiresome topic in the currency world! However it looks like things are getting closed to being resolved. They have taken a crucial step towards a bailout after its parliament passed a second set of reforms today, and this has given confidence back to the Euro. This is why the market initially started dropping this morning. There had been fears of a rebellion by Greek MPs, but the Greek Prime Minister Alexis Tsipras got the required support. This means that negotiations can begin on approving the terms of a third bailout. It looks like a final deal will be sorted out within the next 3 weeks, and if so I’d expect the rate to drop even further. 

The second reason for the decline was some very poor UK Retail Sales numbers this morning. The number was expected to show a rise of 0.4%, but actually sales dropped by -0.2%. As retail sales are seen as a good overall barometer of economic activity, the news sent the Pound lower, pushing rates even further from the 8 year high of €1.44 we’ve recently seen. 

Will rates recover?

Moving Forwards, longer term I think rates will continue to remain strong due to the UK economy performing well, despite today’s poor numbers. However in the short to medium term, if the ongoing Greek saga finally ends with a full €86bn bailout, expect the GBP/EUR rate to fall sharply as the Euro regains strength. 

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Sterling gains on BoE MPC minutes

Wednesday 22nd July 2015 
Yesterday was not a good one for Sterling/Euro rates, with levels sliding all day from €1.44 to €1.42. The reason for the drop was renewed confidence about Greece, and in particular credit rating agencies increasing Greece’s rating as they felt there is now much less chance of them leaving the Eurozone. 

This morning, Sterling has fought back slightly after the release of the Bank of England (BoE) minutes from this morning’s Monetary Policy Committee (MPC) meeting. The full minutes can be read here.  

The key phrase I noticed was “the decision between holding Bank Rate at its current level versus a small increase was becoming more finely balanced”. This means that despite all 9 members voting to keep the interest rate at the record low of 0.5%, it shows that they are going to start leaning towards finally raising rates towards the end of this year. The next meeting is in 6 weeks’ time, and we may start to see some of the members voting for a hike in rates. 

This has given Sterling a boost, as the rumour of an interest rate rise usually does. The same effect has been seen on the US Dollar this week. 

View live currency graphs here

Today’s Data 

All eyes were on the Bank of England and the inflation report this morning, and at 10am there is a parliamentary inflation report. For the remainder of today, the only data of note is an Interest Rate decision and policy statement by the Reserve Bank of New Zealand. Their inflation is very low at the moment, and the NZD is very weak due to the low commodity prices (See my post about commodity currencies to learn more). I think there is a chance they will cut interest rates to try and boost the economy. If they do, then expect GBP/NZD rates to go higher. 

Getting the best exchange rates 

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Why has Pound fallen against Euro June 2015?

Tuesday 2nd June 2015
This morning we have seen GBP/EUR rates plummet, with the currency pair falling by 2.5 cents from €1.3950 this morning, to €1.37 at the time of writing:

What has caused the drop? 

The reason for the drop was a strengthening Euro. Earlier today we saw the latest EU inflation numbers, and these showed that inflation in the Eurozone turned positive in May after five months of negativity, and this revives hopes of an economic recovery in Europe. Earlier this year, the European Central bank embarked on a huge €1.1 trillion Quantitative Easing, or money printing programme in an attempt to stimulate the Eurozone economy, and the figures today suggest that this is working. That is why the Euro gained strength and has become more expensive to buy. 

Meanwhile in Greece… 

Also today there may have been developments in Greece. Their Prime Minister Alexis Tsipras has said that he has issued "a realistic proposal" to its international creditors in an attempt to secure a deal over its debts. "We have submitted a realistic plan for Greece to exit the crisis," he said. The problem is, we don’t know what this plan actually entails! International Monetary Fund chief Christine Lagarde and ECB president Mario Draghi are at a meeting between German Chancellor Angela Merkel and France's Francois Hollande discussing the issue at the moment, and their attendance shows how serious these talks are. 

If they really have made a plan that might be accepted, expect the Euro to gain further strength in the coming days pushing rates even lower. If however his plans come to nothing, then the uncertainty about what will happen with Greece will remain, and this could weaken the Euro and cause rates to recover 

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GBP/EUR drops to €1.3850 as Euro gains strength. GBP/USD rises.

Wednesday 29th April 2014 
In my last post a week ago, I talked about the Sterling/Euro rate breaking through the €1.40 level. As I predicted, this spike to a near 8 year high was short lived, and today the rate has fallen from 1.40 down to €1.3850 as you can see from the chart below: 

Why has the Pound/Euro rate fallen? 

Simply put, the Eurozone economy is starting to perform well. Euro and German bond yields rose to their highest level in several weeks today, after data showed bank lending has stopped falling, and consumer inflation expectations have risen. As the European economist at RBC Capital Market has said, "Happier days are on the cards”. He added that "The continued improvement in credit supply conditions bodes well for the sustainability of the euro area recovery overall." 

So it seems that the latest figures show that the European Central Bank's (ECB) Quantitative Easing programme is starting to have a good effect, much as stimulus programmes in the UK and USA have done. Also, there has been positive news on Greece. They are expected to present legislation to lenders to show it is serious in making efforts to repay it’s debts, and as a result the Euro has gained strength and become more expensive to buy. 

If you need to buy or sell Euros, would like a quote or to discuss whether the Pound/Euro rate is likely to go up or down in the coming weeks or months, send me a free enquiry today by clicking here. 

Pound/Dollar rates rise to nearly $1.55 

In contrast to the GBP/EUR rate dropping, GBP/USD has risen nicely in the last few weeks, rising from $1.46 to $1.55: 

This is because today figures showed that the US Economy is growing much slower than expected. In turn this means that interest rates aren’t likely to rise as quickly as previously thought, and as a result the US Dollar has lost value and become more expensive to buy. 

Which way will Pound/Euro and Pound/Dollar exchange rates move next? 

While it’s impossible to predict, I think that now the EU economy is looking more robust, focus will turn to the UK election, so we could well see Pound /Euro rates continue to fall. That assumes of course that Greece makes its upcoming €1bn debt repayments. If they don’t, a rise back to €1.40 could be on the cards. 

Pound/Dollar rates on the other hand are likely to keep dropping. I think this spike above $1.50 will be short lived and expect the rate to be back down in the €1.40’s before long. 

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Pound falls further against other currencies

Thursday 31st July 2014 
As I said may happen in my recent post, the Pound has fallen further against the Euro and Dollar this week. Let’s take a look at what has been happening… 

Pound/Euro drops into the €1.25’s 

Looking back, the GBP/EUR rate has risen by more than 10% in the last year, however it now looks like the Pound’s year-long rise may have come as far as it can, at least in the short term. On the one hand many remain positive on Britain’s economic prospects however the feeling is growing that Sterling is “overvalued” and this may hamper efforts to re-balance the British economy. 

The IMF agree - this, the International Monetary Fund has warned the Chancellor that the pound is 5% to 10% overvalued. Wages are growing very slowly and although output is beginning to pick up, the recovery is still at an early stage and there is still a lot of slack in the economy. Another risk for the Pound is Scotland’s September vote on independence might pose to sterling. Morgan Stanley analysts said that a “yes” vote could cause sterling to slip by up to 10% on a trade-weighted basis, retracing its gains over the past year. 



This week, poor UK consumer confidence and better economic figures from the Eurozone have pushed Pound/Euro lower. 

It’s impossible to know which way exchange rates will move of course, but if you need to buy or sell Euros, click here to have a free consultation on how I can help you get the best exchange rates, and protect you against the market moving the wrong way. 

Pound/Dollar drops into the $1.68’s 

We recently saw this currency pair hit a 5 year high well above $1.70. I’ve been expecting it to come down for some time once the US economy starts looking better. This has now happened with this week’s US GDP numbers coming in better than expected, showing their economy is starting to recover. As it does, they will wind up their Quantitative Easing programme, raise interest rates, and this may pull rates lower towards the $1.60’s. 



The turmoil in Ukraine isn’t helping GBP/USD rates either. As global economic uncertainty gathers in the markets, international investors move funds to the safety of the US Dollar, and this also pulls rates lower. 

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This week's data that could affect exchange rates

Monday 28th April 2014
Good morning. Today I will give a brief outline of how Sterling exchange rates start the week, and then I’ll list all the economic data releases that I think will affect currency prices this week. 

Let’s start with how the Pound is performing this Monday morning. Sterling has risen against the US Dollar this morning, hitting $1.6850. This was due to a strengthening of the Pound after U.S. drug maker Pfizer confirmed it had made a bid approach to Britain's second-biggest drugs group, AstraZeneca.  

There weren’t any gains for Pound/Euro however, as the Euro is being kept strong by expectations that EU inflation will rise when figures are released later this week. 

Below I will list the main data releases I think will affect exchange rates. If you have a currency transaction to perform, and would like to get a quote or discuss how I can assist you, click here to send me a free no obligation enquiry. 

This week’s economic data releases. 

Monday 28th April 2014 

It’s been a quiet start to the week, with the merger and acquisition news about Astra Zeneca giving the Pound a lift. The rest of today is also quiet, with some US Home Sales data due at 3pm. Later this evening we will see New Zealand’s latest trade balance data that could affect GBP/NZD rates. 

Tuesday 29th April 2014 

Today is the main day this week that might affect Pound/Euro rates. At 09:30am we will see the latest UK Gross Domestic Product figures. They’re expected to come in at 0.9% (quarterly) and 3.2% (annually), so any deviation from these numbers could see the Pound rise or fall accordingly. 

This is followed at 10am by EU Investor and Consumer confidence, so the Euro’s value could also be affected today. There are also German inflationary releases due at 1pm. 

Wednesday 30th April 2014 

Late on Tuesday evening UK Consumer confidence figures were due to be released, so when the markets open at 8am we could see some reaction. Also today we have Germany Retail Sales and Unemployment, and EU inflation numbers, so GBP/EUR could be affected. 

It’s a busy day stateside today, with GDP figures, a FED interest rate decision, and FED policy statement all expected to affect Sterling/Dollar rates. 

Thursday 1st May 2014 

Some minor Credit and Mortgage data is released from the UK this morning but I don’t expect it to affect rates. The rest of today’s ecostats are from the USA: Jobless Claims, a speech by Janet Yellen the FED chair, Manufacturing and Construction. GBP/USD will therefore be the currency pair most at risk today. 

Friday 2nd May 2014 

UK Construction data, along with EU Unemployment and growth forecasts will drive the Sterling/Euro pair today. This afternoon we have the US Non-Farm Payrolls – these are usually very different from forecast so often causes GBP/USD to move - the numbers are released at 1.30pm so expect a choppy day’s trade for cable. 

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No change in GBP/EUR after ECB Draghi Speech

Thursday 24th April 2014 
Sterling remains well supported today, however rates haven’t risen any higher following the press conference by ECB member Mario Draghi.

Sterling/Euro remains at €1.2150 

As highlighted in previous posts this week, there was a chance that Pound/Euro rates could have risen today. 

The ECB president Mario Draghi has been warning against a strong Euro, and in recent speeches he has given little hints about further monetary easing to stop the Euro getting too strong. He gave a press conference this morning, during which he could well have talked about the Euro being overvalued if he had chosen to do so, and if he had hinted at some sort of easing I would have expected GBP/EUR to make gains. 

In the event it had no real effect. He did say that the ECB could make asset purchases to ward off the threat of disinflation, and mentioned that undue tightening of monetary conditions could lead to negative deposit rates, but didn’t really add anything to what he has already said previously. Read all his comments here if you so wish!

So rates did climb a little from 1.2130 to 1.2150, where they remain at the time of writing. We saw a slight dip in rates before his speech but as the chart below shows, with nothing new on offer in his words, the market returned to its starting point. 

We now look ahead to tomorrow morning’s UK Retail Sales. I’m expected the number to show growth of around 3.8%. As Retail Sales are a good overall barometer of economic activity, it could push Sterling higher if the actual number surprises to the upside. 

Sterling/Euro close to a 14 month high 

The current levels are within 1 cent of the best they have been since January 2013 so it does seem to be a favourable time to buy Euros with Sterling. 

If you have an upcoming currency requirement, then why not get in touch to see what rate I can offer you, those with large volumes to convert may be surprised at the difference even a slightly better rate of exchange can make.

Alastair Archbold

Sterling/Euro €1.21 & Sterling/Dollar $1.6740

Tuesday 15th April 2014
Sterling is holding firm above €1.21 against the Euro, and has risen to $1.6740 vs the US Dollar. The Pound has however remainder relatively range-bound this week without pushing much higher than that. Its 2 things keeping the rate supported: firstly we had the ECB president over the weekend say that if the Euro strengthens, they will look at stimulus. Today, UK inflation numbers were as expected, increasing the chance of an interest rate hike in the UK next year. 

In today’s post I’ll take a look at these 2 things that are keeping rates supported, and explain how you can take advantage of the current rates which are around a 16 month high. 

ECB warns of stimulus if Euro strengthens further 

ECB President Mario Draghi said in Washington on Saturday that "further strengthening of the exchange rate would require further stimulus." 

So what does this actually mean? 

If the Euro were to strengthen, it would become more expensive to buy and Sterling/Euro rates would fall. His comments effectively say that if the Euro were indeed to strengthen, they may pursue a Quantitative Easing programme to stop it doing so. This has kept GBP/EUR rates at the €1.21 level. 

So if this is the case, could rates go higher? I don’t think so, unless they actually decide to go ahead and pursue a QE programme. At the moment it’s just rhetoric, so while it’s keeping rates from falling, it’s unlikely they will rise in the short term. 

For those of you that need to sell Euros, this means rates are likely to remain range-bound so you may wish to consider fixing a rate sooner rather than later. It’s the same story for Euro buyers, as rates have failed to go higher than these levels recently. 

UK Inflation numbers also keep the Pound supported 

Inflation numbers came in as expected at 1.6% this morning. Some in the market thought the number would be a little lower, which would have meant less chance of an interest rate hike in the UK in 2015. 

Higher interest rates mean a higher return for investors, so speculation it will happen sooner rather than later is good for the Pound. As the number was as expected, it remains the case we think rates will rise in 2015, so this gave Sterling a little boost this morning. 

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Pound/Euro rates could change tomorrow...

Wednesday 2nd April 2014 
We have seen Sterling rise against the Euro today, getting pretty close to the €1.21 level. We’re unchanged against the US Dollar which remains just above $1.66. 

I think that tomorrow is going to be a key day for Pound/Euro exchange rates, due to the ECB meeting that will give investors an idea whether they are going to take action to combat deflation. Today I will explain what tomorrow’s meeting means for those that need to buy or sell Euros at the best exchange rates. 

It will be a very important day for those of you that need to buy or sell Euros in the coming months. Read on to find out how tomorrow could affect currency exchange rates, and if you would like to discuss your requirement with me in detail, get in touch with me today. 

I can help you achieve exchange rates up to 5% better than banks or other brokers, so get in touch for a quote. It costs you nothing, and you could be very surprised how much you could save by using my services. 

European Central Bank (ECB) meeting may affect GBP/EUR 

The ECB really do hold the key to which way the Pound/Euro rate will move in the coming weeks and months, and it’s all to do with interest rates and inflation. First, a bit of context. In the UK our interest rate is 0.5%, and as the economy recovers the Bank of England (BoE) will start to raise rates, probably around this time next year. That’s what has been keeping the Pound strong, because higher interest rates strengthen a currency due to the higher return. 

In contrast, the Eurozone inflation levels keep dropping, and many analysts have been calling for them to cut interest rates. This is also helping GBP/EUR stay high, as lower interest rates are keeping the Euro weak, and a weaker currency is cheaper to buy. 

So, on to the meeting tomorrow. At 12:45pm they will announce interest rates. I don’t expect any change to their rate. At 13:30pm the president Mario Draghi gives a press conference, and it’s what he says here that we’re interested in. 

What could Mario Draghi say that could affect Sterling/Euro exchange rates? 

There are 2 scenarios, each of which is likely to affect the exchange rate you get. Firstly, he may say that due to deflation worries, they may have to take some easing measures in the future such as cutting interest rates, or doing a Quantitative Easing style programme similar to what we saw in the UK. If he hints at either of these things, the Euro will weaken and Pound/Euro rates could rise nicely. 

Alternatively, he repeat what he’s said in recent meetings, which was that deflation will sort itself out on its own, and therefore no action is necessary. In this scenario, Pound/Euro rates could plummet well below the €1.20 level again. 

What do I think will happen? 

I think they will hint at some sort of easing. The market thinks this too, and that’s why GBP/EUR has risen today as this gets priced into the market. I will of course update the blog tomorrow with a full outline of what happens and how it affects exchange rates. 

What should you do if you need to buy or sell Euros? 

Tomorrow could well affect the rate one way or the other, and there’s no way to predict which way it will go. If I need to buy or sell Euros, I would not want to risk the rate moving against me. 

I would therefore hedge my bets by converting half of my funds before tomorrow’s announcement, and then wait and see what the market does before converting the rest. 

This removes 50% of your exposure and give you some protection against adverse exchange rate movements. 

Find out more about the rates and service I offer 

If you have a currency transaction to perform and would like to find out how I can help you, get in touch in the following ways:

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Call me directly: +44 (0) 1442 892 066 

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Will exchange rates go up or down this week?

Monday 31st March 2014 
We have seen the Pound slide off a little at the start of the trading week, with GBP/EUR falling from €1.21 down to €1.2050, a drop of around 0.4%. This was mainly due to consumer credit being lower than expected, reflecting a lack of confidence surrounding the UK economy. This afternoon however it's bounced back to where we started around the €1.21 level, so all in all no change.

There are lots of economic data releases this week that could affect exchange rates, so as usual for a Monday I am going to list what I think are the most important releases, and analyse how this could affect the currency markets. 

If you need to convert one currency to another, on a bank to bank basis for volumes between £5k and £10m, then read on, as my thoughts below can help you decide when may be the best time to fix your rate. Get in touch if you would like a quote, or to discuss your currency requirement with me in detail.

This weeks economic data releases...

Monday 31st March 2014 

As I’ve already outlined above, the only UK data was slightly disappointing, taking the steam out of Sterling’s recovery. We also saw some EU inflation data this morning, which was roughly in line with expectations. Interestingly the BBC pitch this as terrible news, meaning a possible rate cut by the ECB - if that were the case, Pound/Euro would have gone up, not down.

The only other thing of interest today is a speech by Bank of England governor Mark Carney. His comments have recently had a big impact on the value of the Pound. In short if he is positive about the economy, Sterling may gain strength. I think it’s more likely he will have quite a cautionary tone, mirroring the BoE’s recent comments about being concerned about the Pound getting to much stronger, so I think a drop is more likely. 

Tuesday 1st April 2014 

We’ll start in Australia today, and early in the morning we have their interest rate decision. I think it’s very likely they will leave it at 2.5%. GBP/AUD rates have fallen recently due to more demand for their raw materials from China. 

UK Manufacturing figures are released at 09:30 and I expect a reading of 56.9. Higher means exchange rates could rise accordingly and vice versa. 

German and EU Unemployment figures are released from Europe today, so those looking to buy Euros need poor numbers here, which would weaken the Euro and make it cheaper to buy. We also have unemployment from the United States, along with some manufacturing numbers. 

Wednesday 2nd April 2014 

Some construction data from the UK today to follow yesterday’s manufacturing. The forecast is 63.00 and as always, a differing result could affect Sterling exchange rates. 

The main event today however is EU GDP, which will show how their economy is growing. Their last released showed very small growth of 0.1%. Any better, expect GBP/EUR rates to drop away due to a stronger Euro. 

Thursday 3rd April 2014 

As always for the first Thursday in the month, the European Central Bank announces its interest rate, which is 99.9% likely to stay at 0.25%. Euro buyers or sellers should pay close attention to the press conference afterwards by President Mario Draghi. He may hint at a negative deposit rate – if he does, I think Pound/Euro will march upwards. The EU also released Retail Sales figures today, which are a good barometer of overall economic activity. 

Elsewhere, Australian Trade Balance figures and Retail Sales are announced, and over in the States we have Trade Balance numbers and Jobless numbers. 

Friday 4th April 2014 

The only data of interest today is stateside – Earnings and Unemployment, along with non-farm payrolls. Non-farms is always interesting, and it announces how many new jobs have been created, excluding the farming sector (because it’s seasonal). It’s notoriously difficult to forecast, and the consensus is that 196,000 new jobs will have been created. 

It’s likely the actual number will differ significantly from that – lower, then GBP/USD will rise, higher, and it will fall. Personally I think it will be quite a bit lower, closer to 130,000. We will see! 

Find out more about the rates and service I offer 

I can help you achieve an exchange rate up to 5% better than your bank or existing broker may offer. The savings can be considerable, so why not get in touch for a free quote? If you have a currency transaction to perform and would like to find out how I can help you, get in touch in the following ways: 

• Click here to send a free enquiry 
• Call me directly: +44 (0) 1442 892 066 

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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

Sterling up after Retail Sales smash forecasts

Friday 17th January 2014 
This morning at 09:30am we saw the latest UK retail sales figures. These are watched closely as they reflect the overall economic situation in the UK, and for this reason the numbers often have an effect on exchange rates. 

The figures this morning were significantly above forecast, and as you can see from today’s GBP/EUR chart below, they have caused a big spike in exchange rates:

 

The numbers showed that sales in December were up 5.3% on a year ago, and this is the fastest annual sales growth in more than nine years. The forecast was for 2.6%, so it's significantly better than expected. The figures from the Office for National Statistics (ONS) suggested growth in consumer spending above the expectations of many analysts. 

There aren’t many other significantly releases today, other than a speech by a Bank of England member at lunchtime, and some US Housing numbers later this afternoon. 

Do you need to buy Euros?

The spike this morning has pushed GBP/EUR rates back up to a 12 month high. 

We’ve seen this happen several times now over the last 6 weeks, only for the gains to be short lived and rates to drop back away again, so if history repeats itself we could well see rates drop back away. 

If you need to convert Pounds to Euros, this could be a good opportunity to take advantage of this spike. 

If you need to buy Euros and would like to see what rates I can offer you, click here to send me a free enquiry. 

Are you converting Euros back to Pounds? 

Rates have been above the €1.20 level for some time now, and we have seen it spike several times before dropping back away. If you need to convert Euros to Sterling then the medium term forecast for the market moving against you should ring alarm bells. 

 You can use tools such as Stop Loss Orders to help you achieve the best rates possible. If you would like to find our more about how these works and the excellent exchange rates I can offer you, click here to get in touch with me today. 

Are you converting another currency, for example NZD, AUD, CAD, USD, CHF? 

I can trade most of the world’s major currencies, at exchange rates that are up to 5% better than banks can offer. This combined with the range of currency contracts available and my excellent knowledge of the currency markets could save you thousands of Pounds if you need to convert one currency to another. 

Why are you reading this? Perhaps you’re buying or selling a property abroad, or buy or sell goods in a different country, but whatever your requirements, you are likely reading this because you want to know which way exchange rates may move, and would like to achieve the best exchange rate possible. 

Get in touch with me now my sending me a free enquiry. 

I can have a brief chat with you over the telephone, discuss your requirements, explain the options you have available, and let you know the rate I can offer. By getting in touch you could well save yourself thousands of Pounds. 

I look forward to hearing from you. Have a great weekend. 

Alastair Archbold

Pound rises to €1.21 / Central Bank Decisions

Wednesday 8th January 2014 
We have seen the Pound gain in strength today, and Sterling/Euro exchange rates have risen to €1.21. In today’s post I’m going to give my view on why I think this has happened, and also have a look at what could happen tomorrow (Thursday) which I think is going to be key for what happens to exchange rates in the short term. 

It’s a very important day for currencies as we have some key data from 3 of the world’s major central banks in the next 24 hours. But first, let’s look at today’s gains….

Pound/Euro rates rise to €1.21 

As you can see from the chart, Pound/Euro rates have gained nicely today, hitting €1.21 before levelling off. So what has caused the jump in rates? 

One factor could be the unemployment numbers from the Eurozone that were released earlier. It shows unemployment is now at 12.1%, which is much higher than we have in the UK. As such this may have weakened the Euro causing rates to rise. But to be honest, the number was pretty much as expected, and EU Retail Sales were actually better than forecast, so I don’t think that’s the reason for the movement today. 

 I think the reason for the rise is more market expectation on what will happen in the next 24 hours, when we have some key releases from 3 of the worlds major Central Banks – the Bank of England, the European Central Bank and the Federal Reserve. So, let’s have detailed look at what effect any action by these central banks could have on exchange rates. 

*** Key Central Bank decisions in the next 24 hours ***

European Central Bank (ECB) 

Tomorrow at 12:45pm the ECB will announce their latest decision on interest rates. I think it is very unlikely that they will change the rate, but at 13:30pm the ECB President Mario Draghi will give a press conference. 

This is very important, as if he hints that rates may be cut in the coming months, then the Euro is likely to weaken. I think there is a good chance rates may go down in the EU, as inflation is falling in the EU. I also think that could be the reason that the Pound/Euro rate has gone up today, as markets start to factor in the likelihood of this happening. So listen carefully tomorrow lunchtime to his comments, and see the effect it has on rates. If he doesn’t hint at rate cuts, then expect GBP/EUR rates to drop back away. 

Bank of England (BoE) 

Like the ECB, the BoE also announce their latest decision on interest rates. Also like the ECB, I don’t expect any changes or surprises. 

Sometimes the governor, Mark Carney, makes comments after the decision, and usually he is quite positive about the Pound. I don’t think the BoE decision will cause many waves, and all eyes will be on the ECB 

US Federal Reserve 

This evening, minutes from the Fed's December meeting, when the central bank announced its decision to begin trimming its Quantitative Easing programme will be released. 

Much like with the ECB, it’s comments that are sometimes made that will move the markets, and if the minutes are very positive, expect Pound/Dollar rates to drop back away. 

Getting the best exchange rates 

I guess you will be reading this as you are keen to know which way exchange rates may go, and want to make sure you get the best rate possible, at the best time; while markets cannot be predicted, hopefully my blog is proving useful for you in this respect.

Feel free to send me a free enquiry by clicking below, and I can get in touch to discuss your particular requirements, and answer any questions you may have on exchange rates. I can also help you achieve exchange rates that are up to 5% better than banks can offer, and so the savings can be considerable. 

So get in touch today, it costs nothing, and you may be very surprised how much you can save. 

Click here to send me a free enquiry now. 

I look forward to hearing from you. 

Alastair Archbold

This will be an important week for Sterling...

Monday 16th December 2013
Good afternoon. It's been a quiet start to the week, and since my last post Pound/Euro rates remain in the mid €1.18's, and Pound/Dollar rates around $1.63. This week will be key to whether rates continue dropping as they have in the last week, or resume the trend of the last few months which has seen the Pound rise against other currencies.

Sterling has been one of the currency market's surprises since the summer, having risen consistently over the last 6 months. As I've been explaining over the last few weeks, really impressive economic data has strengthened the Pound, and it's also been helped by the view that interest rates may rise earlier than previously expected. 

This week in my view will be key to the direction Sterling takes over the next month, as we have some key economic data releases including inflation data on Tuesday, and minutes from the Bank of England's Monetary Policy Committee and jobless data on Wednesday, followed by Gross Domestic Product figures on Friday.

So in today's post I'm going to list all the things to look out for which may cause volatility in exchange rates this week. 

Looking for excellent exchange rates?

This weeks economic data releases that may affect exchange rates

Monday 16th December

This morning we saw EU Manufacturing and inflation numbers, which were better than expected. This caused the Euro to strengthen and pulled GBP/EUR rates lower. 

This afternoon we have Speech by the European Central Bank president Mario Draghi, which may cause further volatility in Euro rates. 

Tuesday 17th December

Starting in Australian we have the RBA minutes and a speech which may cause changes in GBP/AUD rates. Closer to home, at 09:30am we have a raft of inflation data. This is linked to future interest rate movements so could change Sterling’s value. 

In the Eurozone we also have a raft of inflation numbers in addition to some surveys that look at Economic Sentiment. Over in the States we have more inflation numbers and house price data. 

Wednesday 18th December

This is the key day for the Pound. At 09:30am we have the minutes to the recent decision by the Bank of England to hold interest rates and Quantitative Easing. The minutes show what was discussed and often cause exchange rates to fluctuate. We also have the latest unemployment figures. This is key as future interest rate movements have been linked to a drop in Unemployment figures, so if the number is any lower than 7.6% expect the Pound to make gains, and vice versa. 

The rest of today’s data is from the USA – Building Permits, Mortgage Approvals, an Interest Rate decision, and economic projections from the FED. So all in all, a key day for both GBP/EUR and GBP/USD exchange rates. 

Thursday 19th December

UK data today is Retail Sales. This is seen as a good overall barometer of economic activity so it could be another choppy day for Sterling. There are no EU releases of any significance, but over in the USA in the afternoon we do have Jobless Numbers, and Home Sales figures. 

Friday 20th December

Another very important day for the Pound. We have a measure of consumer confidence, but I think the main event will be the latest Gross Domestic Product figures released at 09:30am. GDP is considered as a broad measure of the UK economic activity. This is key as it will indicate whether the UK recovery is sustained, so could push rates higher or lower depending if the number is higher or lower than the expected +0.8%. 

Elsewhere, GDP numbers from the states are released at 13:30pm, and a Consumer Confidence measure for the Eurozone at 3pm. 

Looking for the best exchange rates? Make a free enquiry today

If you are looking for the best exchange rates, and would like to discuss how the above data could affect the exchange rate you're interested in, then send me a free enquiry today. I offer a free consultation service where I can discuss your particular requirements, and explain what could move the rate for or against you. This can help you to decide when to fix an exchange rate. 

In addition to taking advantage of my market knowledge, I can also help you source excellent commercial exchange rates, that are up to 5% better than banks can offer.

If you have a requirement to convert a large volume of funds, the savings can be considerable. Find out how much you could save by clicking below and sending me a free enquiry now. 

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